A Texas REALTOR® on the lessons to be learned from Hurricane Harvey

Dramatic images from Hurricane Harvey of water up to homes’ rooflines make one wonder if the real estate market in Houston will ever recover. What might happen to the real estate agents who make their livings helping people buy and sell those properties? What lessons can they, buyers and sellers learn from Harvey’s devastation?

That’s where the reality comes in, according to Dawn Lavka, treasurer of the Women’s Council of REALTORS® Texas and a real estate broker, Dawn Lavka Realty, in Austin, Texas.

Dawn Lavka

Homeowners’ best laid plans to avoid disasters can’t stand up to Mother Nature’s unpredictability and fury.

“Any property has the potential to have these issues,” Lavka said. “I want to remind you that most of the properties that flooded in Houston were not in the typical flood-prone area or flood zone — for example, 100-year flood plain, where flood insurance is required. So, most of these properties had absolutely no history of flooding. Unfortunately, this is very common anytime you have any of these issues, with massive amounts of rain that come down at any one time.”

While it’s scary, Lavka said, the bottom line is Mother Nature really is in control.

“It really doesn’t matter what it says on a map — whether a property is flood-prone or not,” she said.

Residents of cities across the U.S. live with the threat of disaster, according to a recent New York Times’ article. The threat of hurricanes looms along the coastline from Miami to Maine. Chicago is no stranger to tornadoes and San Francisco and other California cities to earthquakes.

Lesson 1: Take the necessary steps

Lavka said agents working with potential buyers should look at flood zones and how a property is located according to those maps.

“Of course, you’re going to want to make sure you have a survey and have an elevation certificate, which shows the house is actually outside of (above) the flood zone, ” Lavka said.  “Most insurance companies require that the property is higher than the flood plain for insurability.”

The main source of flood insurance for U.S. homes is through FEMA’s National Flood Insurance Program. According to the federal website, homeowners and renters purchase flood insurance through insurance agents — they cannot buy it directly from the government. (If an agent doesn’t sell flood insurance through FEMA’s program, owners and renters can contact the NFIP Referral Call Center at (888) 379-9531 to request an agent referral.)

“It really doesn’t matter what it says on a map — whether a property is flood-prone or not.”

Timing may be an issue for some seeking flood insurance. For example, it’s difficult to get right before an approaching storm because of a 30-day waiting period for the national flood program, according to a recent TCPalm.com story about how homeowners in Florida couldn’t tap the government’s flood insurance program for Hurricane Irma in the days before that storm was projected to hit the state. The private market for insurance is an option for some, according to the article.

Ironically, the nation’s flood insurance program is sinking deeper into debt, according to a recent article in the Insurance Journal. Congress is considering a reauthorization of the government’s flood program, which according to a Congressional Budget Report is on track for a $1.4 billion shortfall.

Lesson 2: Consider lifestyle’s huge role

It’s no secret among real estate agents; buyers and sellers know that natural disasters happen.

“I sell in Austin but also in the Highland Lakes area, so those properties are near bodies of water. Water is responsible for flooding,” Lavka said.

It’s the lifestyle, she said, that will continue to draw full- and part-time residents to those properties.

“Most of the condos that you see destroyed in the coastal area are vacation homes and second homes, which are used a lot of the time for recreational type activities,” Lavka said. “Most owners buy with that understanding. They know the reason that they’re buying is because a property looks at the ocean or at a body of water.”

Buyers are drawn to the boat dock, which in reality is 2 inches off the top of the water level, she said.

For sellers, the message is much the same, according to Lavka. Buyers in many cases are willing to buy because a property fits in their lifestyle, whether that’s for recreational, professional or other lifestyle purposes.

“Some sellers will have had it after Harvey and want out, while others will see Houston, which was a booming residential market before the storm, as an opportunity.”

“You’d be surprised. I’ve had sellers and listings on lakes and waterfront properties, as the lake dried up, when we had the drought here in Central Texas not too long ago,” Lavka said. “People were putting their properties on the market, knowing it would take a little bit longer to sell. I think the potential buyers were probably thinking they were getting a good deal.”

The same could be true for buyers interested in the Houston market, once repairs are made. Sure, she said, some sellers will have had it after Harvey and want out, while others will see Houston, which was a booming residential market before the storm, as an opportunity.

“But again, just like real estate is local to your local economy, what’s happening in one neighborhood may not be happening in another,” Lavka said.

Real estate agents should monitor whether their areas are a sellers’ market or a buyers’ market.

“We also have to remember that it’s very individualized with the people that own the properties. And it depends on what they’re doing and what they’re thinking and where they are in their lives,” Lavka said. “If they’re ready to turn the page and go on to the next chapter, then they may just decide to liquidate. But if they’re there because it’s the lifestyle they enjoy, they’re not going to let it go.”

Lesson 3: Life goes on

Lavka said that little has changed in her approach to real estate since Hurricane Harvey. Austin was impacted. Eleven inches of rain fell around Lavka’s home.

Still, she said that especially with her focus on resort-type properties in the popular Texas city of Austin, Lavka sees business as usual.

“Those sellers don’t generally expect things to sell as quickly as something that’s a primary residence because it’s not a mandatory purchase,” she said. “Nothing is really going to change in that market, other than we’re not going to have a lot of inventory available on the coast until the repairs are completed.”

The inventory issues could go on for quite a while, Lavka said.

“There may actually be a shortage of properties on the Texas coastline and Houston for a while,” she said.

Real estate agents in Houston will have to wait for the water to go down and the dust to settle to figure out what’s going to happen, according to Lavka.

“I think there are going to be a lot of people looking for rentals, while their homes are being repaired. So some agents may focus on that,” she said.

Lavka said a short-term consideration for real estate agents and their clients is that good help may be hard to find. Roofers and others will be in demand after the disaster. That seems to be the case, according to a recent article in The Dallas News reporting that the construction industry in Texas was strained before Harvey hit, and not only workers but also materials might be in short supply after the storm.

That’s when a real estate agent’s network of trusted professionals comes in handy, according to Lavka. Agents can help people not only find rentals, but also suggest people they can trust in the rebuilding process.