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Monday, September 05, 2005

How Will Katrina Affect Housing Markets?

The New York Times today has an article that asks whether the effects of the hurricane will shorten or extend the housing boom (bubble):

Hurricane Katrina destroyed hundreds of thousands of homes, threw at least a million people out of work, disrupted supply lines for businesses and brought misery to untold numbers. Will it also put an end to the housing boom?

There are good reasons to think so: the storm has led to rising oil prices and shortages of building materials, and is likely to shake consumer confidence. But most experts think the housing market's five-year run still has a way to go before it peters out.

In a weird twist of fate, the storm could even extend the housing boom, which in recent weeks had seemed to be running out of steam.
I think this is a valid question. You can't just wipe an entire city off the face of the nation without some sort of residual effects. But how will this effect the Seattle area, or will it at all? The Seattle Times reports that thousands of displaced people will be making the Seattle area their temporary home.
Washington state is expected to start welcoming at least 2,000 evacuees from the hurricane-devastated Gulf within three days, likely placing them at military facilities or other temporary housing.
The evacuees, many of whom may be sent to King, Snohomish and Pierce counties, could stay six to nine months, according to officials.
The arrival and temporary stay of a few thousand people whose homes have been destroyed is unlikely to have any noticeable affect on our local housing market, but there are other national factors mentioned in the NYT article that could well cause some ripple effects up here:
  • skyrocketing oil prices
  • shortage of building materials
  • shaken consumer confidence
  • dancing mortgage rates (heading down immediately following the storm)
How will these affect us? I certainly don't know, but I'm interested in hearing discussion about it all. What do you think?

(Motoko Rich, New York Times, 09.05.2005)
(Lisa Chiu, Seattle Times, 09.05.2005)

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