Helene’s widespread devastation heightens the risk of a regional housing market correction

Want more housing market stories from Lance Lambert’s ResiClub in your inbox? Subscribe to the ResiClub newsletter. Pockets of the U.S. Southeast are still reeling after widespread devastation from Hurricane Helene, a Category 4 storm that made landfall last week. Rescue crews are working tirelessly, especially in the hardest-hit areas of western North Carolina. As of October 3, there were still more than 800,000 Americans without power, including 300,000-plus in South Carolina, and more than 200,000 in North Carolina and Georgia. According to CNN, Hurricane Helene’s death toll has risen to more than 200. (You can find ways to donate here.) While it will likely take weeks, if not months, to gain a clearer understanding of Hurricane Helene’s full impact, we already know it is the fifth-deadliest hurricane since 1950. Only Katrina in 2005, Audrey in 1957, Camille in 1969, and Sandy in 2012 were deadlier, according to the National Oceanic and Atmospheric Administration (NOAA). The hurricane’s aftermath could also have an impact on residential real estate, further softening some regional pockets of the Southeast. If Helene’s fallout leads to a wave of damaged resale homes hitting the market, shocks to home insurance rates, and a slowdown in regional migration, it could put downward pressure on local home prices. The vulnerability to a local hurricane-induced home price correction is greater now than in the past, given how much housing affordability has been stretched over the past four years. For example, Hurricane Ian, which struck Southwest Florida in September 2022, left behind thousands of damaged homes, with some getting put up for sale. According to NOAA, Hurricane Ian caused an estimated $112.9 billion in damage, making it the third-costliest U.S. hurricane on record. Soon afterward, it put downward pressure on housing markets in Southwest Florida. While active inventory has risen at an accelerated pace in Florida over the past year, the biggest jumps in active inventory and home price declines have been concentrated in areas hit hardest by Ian, such as Cape Coral, Fort Myers, and Punta Gorda.  ResiClub’s research from March 2024 and a research paper by economists at the Federal Housing Finance Agency in May 2024 highlight Hurricane Ian as a contributor to the ongoing housing market weakness in Southwest Florida. The vulnerability to a home price correction in places like Punta Gorda and Cape Coral predated Hurricane Ian, given the pandemic housing boom drove local home prices there so far beyond local income fundamentals. If Hurricane Helene caused damage in regions where home price growth from 2020 to 2022 was particularly excessive, and where work-from-home migration has reversed, the likelihood of a housing correction in those areas could increase. Over the coming months, ResiClub will be closely monitoring Southeast housing market data to see what impact the hurricane damage and fallout are having. Another area to watch: Historically speaking, post-hurricane recovery efforts also often lead to a surge in construction activity as damaged homes are repaired or rebuilt. This can temporarily boost demand for subcontractor labor.