Hurricanes Harvey vs. Katrina: Which Storm Had the Most Impact on the Housing Market?
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Alexa Collins Contributing AuthorClose
Alexa Collins Contributing AuthorAlexa Collins has had her work featured by USA Today, Country Living, House Beautiful, Market Watch, and The San Jose Mercury News. Alexa has written about real estate for 3 years and has interviewed over 100 top real estate agents.
It’s been one month since hurricane Harvey hit Houston.
New Orleans’ real estate market took quite some time to come back post hurricane Katrina. Taking the recovery time from this devastating storm into account, we looked to real housing market transaction data to figure out if real estate in Houston could take just as long to heal.
What we found should give Houston homeowners hope.
Home Sales in New Orleans Took 6 Months to Recover Post Katrina
Hurricane Katrina hit on August 23rd, 2005. As you can see in the graph below, home sales took a steep dive immediately following the onset of the storm. Though Katrina lasted until August 31st, 2005, home sales remained at rock bottom for over a month.
Only one home was sold each week from September 5th until October 5th. Sales only started to pick up beginning in the week of October 17th. Even in December 2006, 4 months after Katrina, home sales were still lower than they were pre-hurricane.
According to Sumant Sridharan, HomeLight’s COO, “Every market is unique, with New Orleans being a smaller market by volume than Houston. Hurricane Katrina, which struck the city in late August 2005, was widely reported to have severely depressed New Orleans on many fronts, and dramatically reduced its available housing stock. Our data confirms that it didn’t bounce back as quickly as Houston has appeared to already, but showed signs of recovery in early 2006. Six months after the storm hit, in March 2006, New Orleans reached nearly the same level of transaction volume as a month prior to the storm hitting in the summer of 2005, and leveled off here for the remainder of 2006.”
The New Orleans housing market took at least 6 months to bounce back, but our data shows that Houston’s market is recovering much faster. This could be because of several factors: number of homes impacted, market size, and desirability of homes and top neighborhoods in Houston, to name a few.
The Outlook for Houston Real Estate
Hurricane Harvey hit Houston, TX on August 25th. Our data shows 402 homes closed on that date, with a drastic decline in sales the day after Harvey began. What’s interesting though is that unlike New Orleans in the days after Katrina, home sales in Houston kept coming in despite the significant drop in total volume. Hurricane Harvey didn’t freeze Houston’s market the way Katrina’s did.
HomeLight data shows 766 homes closed from August 25th – September 3rd, the dates Harvey hit and receded. This hints at a very strong Houston real estate market, and we continue to see steady growth in houses for sale in Houston post-hurricane Harvey.
“As the largest city in Texas and the fourth largest city in the U.S., this year Houston has been widely known as one of the hottest real estate markets in the country. Based on HomeLight’s data on Houston home transactions, Hurricane Harvey only caused a brief dip in the number of homes sold, with the market recovering in a matter of weeks, and was already up to pre-storm levels by mid-September. We don’t expect this to dissipate any time soon as there is still a considerable supply of housing available. Recent reports show that while more than 100,000 properties have been adversely impacted by Harvey across the entire region, there are more than three million properties in the entire region,” said Sridharan.
Good News for Houston Homeowners
The Houston real estate market has already returned to its pre-hurricane strength, while Katrina had a much longer effect on home sales. Katrina impacted real estate well into the following year, while Houston rebounded almost immediately. This is positive for Houston home sellers, as they can expect activity and offers to remain strong despite the dip in the market from Harvey.
Why Did the Houston Real Estate Market Bounce Back Faster?
We did some further research into the relief efforts and strength of both hurricanes to better understand why the Houston market recovered so much faster than New Orleans did. We found stark differences in the preparation before both storms hit, the size of the hurricanes, and the overall preparedness of both cities in case of a natural disaster.
Katrina and Harvey Preparation: FEMA Response
During hurricane Katrina, the Federal Emergency Management Agency (FEMA) was not prepared for a large-scale federal response until a few days after the hurricane hit. Only regional responders were available to prepare before Katrina. The federal response was important during Katrina because the storm impacted local emergency services to the point where they could not help.
In comparison, FEMA was able to rally a federal response of over 31,000 people, plus emergency response supplies, before the onset of Harvey.
Hurricane Size
Hurricane Katrina was almost double in size to hurricane Harvey. Katrina measured 400 miles in diameter while Harvey was 280 miles in diameter. Also, wind speed during hurricane Katrina reached 175 mph while winds reached, at their height, 130 mph in Houston.
The death toll from Katrina was 971 in Louisiana and 2,000 in total. The current death toll for Harvey is 82.
New Orleans and Houston City Preparedness
80% of New Orleans was below water after hurricane Katrina, and emergency shelters remained open 14 weeks post-disaster. The city overall was not nearly as prepared as Houston was. Houston built a “smart-grid” system and proactively trimmed trees to be cognizant of power lines should any fall during the storm. Houston residents in areas prone to flooding had also already built platforms beneath their homes, which helped them stay strong during the hurricane.
These differences point to the ability of Houston’s real estate market to pick up speed so much faster than New Orleans’ could.
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