Hurricane Ike's devastation might not extend to Houston's housing market

Posted by: Prashant Gopal on September 17, 2008

Before Hurricane Ike swept through the Gulf Coast on Saturday, the Houston area’s real estate market was one of the strongest in the country. Home prices were up about 1 percent in the second quarter at a time when most major cities are seeing declines.

But the storm, which might have left about 50,000 homes uninhabitable in the Houston-Galveston-Brazoria metro area, could actually give a boost to the housing market, University of Houston Professor Barton Smith told me today.

The local job market, which has remained robust thanks to the booming energy sector, has helped to fuel the need for housing. The storm has created a shortage of homes, some of which will likely never be rebuilt, Smith said. And new home starts could drop as builders turn their attention to repairing damaged homes, he added.

“This is probably going to create a strengthening of the housing market,” Smith said. “We didn’t have a significant amount of oversupply to begin with.”

Reader Comments

Beautify with Granite

October 10, 2008 5:23 PM

Many of the folks that are homeless will no doubt need a rental. And those that have lost their second home, near the beaches,own vacation and weekend rentals probably, will never be allowed to rebuild. No doubt the empty high rise buildings in Galveston will now fill up with folks that are tired of rebuilding or they do not have the resources to rebuild. Seems those that live on the island are island folks and will want to live near home. South Houston is closer to the water and folks will no doubt try to live as close to their original homes as possible which would be League City, Pearland and Alvin.

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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