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http://www.miami.com/mld/miamiherald/9944027.htm

Hurricanes throw Florida housing market into turmoil

VICKIE CHACHERE

Associated Press

PORT CHARLOTTE, Fla. - Riding out the ferocious winds of Hurricane Charley in their ranch house, the Tanay family made a decision: they were moving.

The Tanays had come to Florida from New Jersey seeking a small-town atmosphere for their four children, but were becoming disillusioned with the hustle and bustle of their rapidly growing community. When Charley blew through town on Aug. 13 and left the area in shambles, that was all they needed to begin looking elsewhere.

"The hurricane definitely pushed us to make our decision sooner," said Joe Tanay, a home construction project manager.

In the aftermath of the state's four devastating hurricanes this year, Florida homeowners and real estate agents are nervously watching how the storms will affect the state's red-hot housing market.

After Hurricane Andrew slammed into south Miami-Dade County in August 1992, about 75,000 residents in Homestead moved out. While the conditions this year are somewhat different, some real estate experts expect there will be homeowners who will eventually make their evacuations permanent.

Whatever affect this year's storms might have, it will be short lived, most experts predict. Despite the exodus from Homestead, new residents have flocked back to area, attracted by affordable homes built to higher safety standards and other amenities in the rebuilt community.

This year's storms have already caused a slowdown in building, delayed closings and complicated the process of obtaining homeowners insurance. But the long-term effects of Charley, Frances, Ivan and Jeanne are less than certain.

Most don't expect the storms to permanently affect the value of Florida real estate, which is among the most rapidly appreciating in the United States.

"People are in such an emotional state because of the severity of those storms and the deaths and property damage," said Liane Bennati, owner of a chain of Buy Owner real estate offices from Atlanta to Naples. "It might take a little longer for it to sink in, but there are going to be more people who are ready to go home."

For the Tanays, their children's schools were in shambles and some of their neighbors were moving away to places such as Maryland and Georgia. Last week, the family went to Charleston, S.C., and found a house they liked. Their 2,100-square-foot, custom remodeled ranch house, which suffered only minimal damage and has since been repaired, was put on the market earlier this month.

"Here in Port Charlotte, they are talking about a year to rebuild the city," Joe Tanay said. "We've got four kids, and they're only going to school a half day. You know the sayings, 'The signs are there.' These were the signs for us."

Because property transactions typically take weeks or months to complete, it's impossible to statistically track which way the trend is going.

One key indicator of people moving in and out of Florida - a survey by United Van Lines, the nation's largest mover of household goods - has shown that both moves in and out of Florida in August and September are down slightly this year.

But at least one Fort Myers real estate agent is so confident that hurricanes won't scare off potential buyers that she posts photographs of Charley's damage on her Web site hoping to attract prospects.

"Two days after Charley hit, this lady drove down here and said she was here to see property and she didn't care if it was destroyed or not, she wanted to see property," said agent Tania Pleischl.

Some people who think they can find steep discounts on damaged property forget the most valuable part of a home site near or on the water is the land itself, Pleischl said. Particularly in areas such as Punta Gorda, where thousands of small, older homes sitting on boat canals, the homes themselves hold very little monetary value.

Elsewhere in Florida, the allure of gentle winters and relatively low housing prices will still beckon, others predict.

Just days after Charley hit, the National Association of Realtors announced that Florida markets led the South in price gains. The strongest market was Sarasota where the median home price was $264,800, nearly 30 percent higher than a year earlier. Sarasota was followed by West Palm Beach where prices were up 27 percent and Ocala and Miami-Hialeah where prices were nearly 26 percent higher.

Real estate agents even in some badly damaged areas such as Port Charlotte and Punta Gorda said their phones continue to ring with prospective buyers aware of the lessons of Andrew.

"It's been an interesting month," said Johanne Wallace, a real estate agent in Punta Gorda. "We have had buyers panic and back out on deals. One might say some of these folks are making a big mistake."

Wallace said in the deals that did fall through, the homeowners were still able to sell their properties within days. She said she's getting a steady stream of e-mails from people whose winter homes were destroyed and who are looking for new properties in the area.

"They are not moving," she said. "They have such a heavy investment here in terms of the community. The elderly people who lost mobile homes still want to come back because their doctors are here."

Marla Martin of the Florida Association of Realtors said the impact of Frances, Charley and Ivan is being felt by home buyers who haven't been able to close on properties because few insurers are issuing new homeowners policies. Some buyers also complain they can't get electric companies that are busy restoring power to install meters on new homes, causing further delays.

Even homes that weren't damaged are being re-inspected or undergoing a new appraisal because lenders are nervous about taking on hurricane-damaged properties, she said.

"I am sure people are concerned. It may make some people rethink moving to Florida," Martin said. "But California has its earthquakes and the Midwest has tornadoes and there's flooding along the Mississippi. Florida is a place that people want to live."

John Cannon, the head of the luxury home building company that bears his name, had dozens of homes under construction and in the path of Charley when it hit. He said the storms complicated what already had been a difficult building season because of heavy rains.

Cannon said the delays might be irritating, but he doesn't believe they'll dissuade potential buyers who might be seeking a dream home along Florida's gulf coast.

"A month from now, or two months from now, or next winter when the weather is beautiful," he said, "people are going to forget all about August and September."

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There's more...

http://www.bizjournals.com/southflorida/st.../18/focus3.html

Storms stun residential market in September

Ed Duggan

Charley, Frances, Ivan and Jeanne are names that will live in Florida hurricane infamy.

The fearsome four left widespread physical, financial and mental destruction in their slashing wakes across the state.

The residential market was part of the fallout.

The storms caused real estate contract kick-outs, delayed and extended closings, and widespread industry and homeowner depression.

Weary sellers were the order of the day as those four 'canes pummeled the state during a six week spate.

Two that lashed South Florida and the Treasure Coast - Frances and Jeanne - were on nearly identical courses and hit just three weeks apart.

The damage was immense - in the double-digit billions of dollars and still counting.

One reader called in to say that the last Homefront column was too prophetic.

"You win the 'Nostradamus Award' for prediction," he said. (The imaginary award is named after Michel Nostradamus, the 16th-century physician who is credited with predicting the future.)

That hopefully not-too-prophetic Homefront column told about the Big Hurricane of 1926 that hit Miami, Miami Beach, Hollywood and Fort Lauderdale, and how it killed the local real estate market for years, plunging South Florida into a depression three years before the rest of the country.

Thanks for the award, but it was only an illustration of what could upset our market.

Let us look at what has upset the market temporarily, and whether or not there may be dire longer-term consequences.

A peek at history may help.

In 1926, the Florida East Coast Railroad offered free passage for those who wanted to leave after the devastating storm. A number of people took the railroad up on its offer and they never came back.

Today, some are threatening to pull up stakes and relocate to Arizona or some other Sunbelt state. Will that pass, or will the traffic be one-way north?

"There has been some current hurricane fallout in the residential resale market," said F.F. "Chappy" Adams, president of Palm Beach Gardens-based Illustrated Properties.

The firm expects to have $1.4 billion in local residential and commercial closings this year.

"Sales were virtually nil during the three weeks between Frances and Jeanne, closings have stopped and a few buyers have backed out of deals where they could," Adams said in late September.

He sees a quieter period for closings through the end of the year as sales attempt to regain lost momentum.

Charles Kovaleski, president of the 50-year-old Orlando-based Attorneys' Title Insurance Fund, said in many cases, lenders in storm-ravaged areas are asking appraisers to re-inspect properties at the buyers' expense for hurricane-related damage. Some real estate contracts are being reconsidered, delayed or cancelled altogether pending hurricane-related damage assessments and repairs.

Attorneys' Title has offices in Miami-Dade, Broward and Palm Beach counties and serves more than 6,000 attorneys statewide.

Illustrated Properties' Adams agrees that delayed sales awaiting repairs are a current stumbling block in some areas, although he thinks there may be some as-is bargains or fixer-uppers that will bring investors back into the market in force.

Is Florida a dangerous a place to live?

Not according to the Federal Emergency Management Agency (FEMA). Approximately three-fourths of all U.S. homes are in risk areas - places that can experience flooding, hail, earthquakes or hurricanes.

Building technology has not stood still, according to Kovaleski.

Homes built since 1994 are considered safer than those built prior to code changes that year, he said. The improved code required all new structures built to withstand winds between 140 mph and 146 mph, roughly a Category 4 hurricane.

There is some precedent for post-disaster attitudes.

"People have relatively short memories," Illustrated's Adams said. "In the very long term, I don't think it will have a measurable effect. There are still many people who want to live in this paradise."

He could be right, but it has been a difficult and ominous time.

Operating without power and telephones at times, weary brokers did their best to placate buyers and soothe sellers as insurers held up new policies and lenders demanded re-certified appraisals before deals could close.

The storm shutters and plywood are coming down from homes, but what of the storm shutters and plywood around potential buyers' minds?

Anthony Cutaia, CEO of the Boca Raton-based Cutaia Mortgage Group, sees plusses and minuses ahead for the residential market.

"The baby boomers will be a major influence in the coming market as they start to retire or buy pre-retirement second homes," he said. "Florida - and particularly South Florida - is, and will continue to be, a destination point for the world."

Cutaia sees the greatest danger in the to-be-built condominium projects, whose sales are propelled by investors and speculators.

"There are four factors which could drastically impact the market ahead," he said. "The availability of insurance, primarily for waterfront property - but for all at-risk areas - escalating property taxes, rising long-term interest rates ... and the next recession."

Prior to the hurricanes, Cutaia urged clients and listeners of his daily radio program to draw down their equity lines of credit in advance of the storms, warning that if their properties were damaged the funds might be frozen or not available.

"I'm a student of cycles and have been around too long to ignore them and their warning signs," Cutaia said. "Market risks can be both real and perceived. Developers and investors need to factor the coming financial storms into their plans."

Might Cutaia be a future winner of the Nostradamus Award?

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an Orlando perspective...

http://www.orlandosentinel.com/orl-homeshu...rl-home-entlife

Fear of storms make some homes no longer wanted

Expansive windows. Towering trees. Waterfront access. A rash of storms has turned selling points into shortcomings -- at least until the fears of anxious home buyers subside.

By Carrie Alexander | Sentinel Staff Writer

Posted October 17, 2004

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A lakefront property with generous windows on a tree-covered lot was considered prime real estate in Central Florida -- three months ago.

Lately, such a property spells trouble in the eyes of many home buyers.

Welcome to the post-hurricane perspective on house hunting where these amenities now take on a more menacing tone. Think potential flooding, shattered glass and possible projectiles.

"Will it [the hurricanes] change people's perception in how they look at property? I think it will for a short period of time," says Greg Rokeh, president of the Orlando Regional Realtor Association. "The storms are so recent, it's difficult to say what the long-term changes will be."

In the short term, however, experts are saying the home-buying experience has been altered.

Before Florida was smacked around by four hurricanes in six weeks, buyers "wanted trees, wanted lakefront, wanted coastal areas," says local real estate broker Gerri Gallo. "The things that were selling points . . . are bad now. Trees are scary to them. They'd rather not be around water and big trees."

Gallo, who works for Domus Pro in Maitland, doesn't expect that mind-set to last once memories of the hurricanes begin to fade. But for now, she says, buyers she sees are being cautious, "and they definitely want concrete houses. People do not want a frame house."

The storms have had quite an impact on the state's housing market and on homeowners' psyches. For example, in Lake, Orange, Osceola and Seminole counties, sales in August were down 2.3 percent from July.

About one home out of every five in Florida has been damaged by a hurricane so far this year, according to the Insurance Information Institute, a New York trade group. Consequently, buyers faced delays in closings as lenders requested repairs and re-inspections, and insurers refused to write policies until the storms had passed.

Meanwhile, rattled homeowners rode out hurricane after hurricane, enduring power outages, roof leaks, flooding and mold. Buyers looking at properties in between storms often had to do so with plywood nailed over windows, shingles missing and trees lying across lawns.

"It is more difficult to determine whether the people take care of their property or not with piles of debris and downed fences and missing roofs," says house hunter Dawn Goldsmith, who visited Orlando the day after Charley struck.

By the time the Illinois resident returned for a second house-hunting trip, she began to realize "that the neighborhoods with the piles of debris along the curb were good stewards, and that's something we look for in our neighbors."

Goldsmith and her husband, Derrol, will be relocating to Orlando for his job. Viewing the hurricanes' aftermath, she says, helped them determine which houses weathered the storms the best. The couple noticed, for example, that many of the homes built in recent years still had roofs intact while some older homes showed roof damage.

"It isn't an exact science, but it is something we consider," she says.

Experts say the ability of newer homes to withstand hurricane-force winds is due, in part, to compliance with the statewide building code instituted two years ago, although Casselberry home inspector Ted Allen says, "Very seldom do I ever get asked about a code on a house."

Consumers are asking what kind of damage a home received during the storms and what kind of consequent damages -- mold, for example -- can be expected. Allen says he has been spending much more time than usual inspecting roofs for possible hidden damages, and he has been looking for structural cracks.

"People are concerned about the structural integrity of the house," he says, adding that some of his findings have warranted a more thorough inspection from a structural engineer.

During the next few months, Rokeh says, "I think that the buyers are going to be inquiring as to the amount of damage and how it was repaired and whether or not insurance proceeds were used for the repairs."

Homeowners planning to sell their house should be prepared to disclose to buyers any problems that are not evident, and that might include a roof leak from a storm, Rokeh says. Sellers also should repair any damage in a timely manner and document those repairs so buyers won't worry about future problems such as mold, Rokeh says. Keep in mind that mortgage companies will expect repairs to be done before they will offer a loan to a buyer.

Another potential problem when selling a hurricane-damaged home, he says, is that insurance companies concerned about a house's history may refuse to insure the home for the next buyer.

"Buyers are reasonable," Rokeh says. "If inspectors say there are no residual problems because of damage, they'll accept that. The wild card will be what the insurance companies decide to do. The real thing that could bring us to our knees is if the insurance companies choose not to stay in Florida or choose to cherry pick which houses they'll insure."

Safe rooms

Homes on the market in the future, however, may be better able to withstand storms if consumer calls are any indication, says Leslie Chapman-Henderson, president of the Federal Alliance for Safe Homes in Tallahassee, a nonprofit organization that promotes ways to protect families from natural and man-made disasters.

She says callers are asking about using building materials that are a step or two above what's required in the building code because they want to protect not only the structure but also the home's contents, which can be damaged by water intrusion.

Impact-resistant windows and safe rooms are probably the two most popular hurricane-related items that consumers are asking about, Chapman-Henderson says. A safe room won't protect homeowners subject to storm surges and flooding -- they'll still have to evacuate -- but it offers protection against a house collapse and wind-borne debris.

"The safe room is a sexy idea," she says. "Instead of going closet to closet, which some people said they did, you can go to the safe room."

A minor selling point last year. A major selling point now.

Out-of-state buyers

Oddly, it's the out-of-state buyers who have not experienced the hurricanes, not the locals, who are rethinking their plans, says Gallo. Clients are canceling appointments, saying they're considering looking for a house in Georgia or South Carolina instead, she says.

"I've had people call and say they really would like to think twice about it [buying in Florida]," she says. "I think people get scared. I tell them you have to look at the big picture. We don't always get hurricanes."

Local house hunters are not deterred by the storms, she says. Maybe it's because hurricanes seem less threatening to Floridians who have weathered a storm or two -- or three -- or maybe it's because, she says, "in the Orlando area, prices are going up so fast and there are so few houses available."

During the six-week period that Florida was preoccupied with the hurricanes, there were 35 percent fewer listings than during the same period a year ago, according to the Orlando Regional Realtor Association. From Aug. 13 to Sept. 29, there were 3,861 listings compared with 5,965 last year.

"What's amazing to me as a Realtor is that the ones shopping in the Orlando area didn't even seem to notice there was plywood on the windows," Gallo says. "They would look completely beyond the trees lying in the lawn and the windows boarded up. There's not much on the market and they want it."

Buyers may be concerned about hurricanes now, but they aren't likely to give up their dream home just because it's in a storm-prone area, says David Fletcher, a retired broker who trains real estate agents in the Orlando area. After all, he says, there are tradeoffs no matter where you choose to live, and in Florida, homeowners accept the possibility of hurricanes in order to live by the beach.

"It's going to take a while to see what the real effects will be" on the real estate market, he says. "But they're still going to buy condos on the beach."

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