Hurricanes Can't Keep the Rich Away. Wealthy Newcomers Continue to Flock to Florida

Photo bySteven Miller

The hurricane-devastated markets are welcoming a surge of wealthy Florida newcomers, says a recent peer-reviewed study.

Long-term demand for Florida real estate has been stable. The average buyer's income has also improved in recent years.

The Sunshine State has been welcoming wealthier home buyers from other states and abroad.

Florida is growing despite upcoming disasters

The study authors were particularly surprised by the discovery that housing demand didn't decline and, somewhat counterintuitively, attracted wealthier residents, especially in light of Florida's grappling with storm adaptation and resilience measures in the face of climate change.

“Hurricanes are projected to get stronger,” coauthor and RFF Fellow Yanjun (Penny) Liao said. “Our findings show that the idea that people will naturally retreat from hazardous areas may not necessarily hold up. In Florida, at least, it appears that market forces are not encouraging people to move to safer places.”

Price spikes follow hurricanes

The authors identified that hurricanes cause a temporary increase in the prices of homes which then gradually decline and return to baseline levels after roughly three years.

Affluent households might move into neighborhoods more frequently after a storm because they have the financial backing to withstand both the temporary price spike and any subsequent increases in insurance costs, according to one theory for the gentrification phenomenon.

The National Flood Insurance Program (NFIP) and government disaster assistance programs may find a use for the study's findings. Gentrification in Florida might increase the number of NFIP post-hurricane insurance claims, which might put more of a strain on the federal taxpayers who fund the program.

Additionally, as a result, federal spending on disaster relief may rise.

Sources

The authors of the paper, coming from the Resources for the Future department at the University of California, and the US Government Accountability Office, assessed Florida's housing markets and population growth using information from county tax assessments, the National Oceanic and Atmospheric Administration (NOAA), and Zillow.