The Housing Market After a Hurricane: Month 2
Some people have to have their daily Starbucks fix. Other people enjoy dropping a #2 while cruising on Facebook. One of my guilty pleasures is looking at Zillow.
Zillow is a Chrome tab you will most likely find open on my phone. Give me interior pictures of a house and I start imagining new cabinets, wood tile floors, a fancy new walk-in shower…
So, it should come as no surprise that I’ve been following the housing market very closely where my husband is working to remediate and rebuild homes devastated in the path of Hurricane Harvey.
I have to say, the housing market after a hurricane is wildly entertaining and at the same time very sad. There’s a surplus of flooded houses right now. At the same time it is also a surplus of endless potential of new beautiful interiors (and some exteriors) without any guilt of ripping apart a perfectly functional house!
However, several MLS listings struck a nerve. Direct links will not be included, but I will summarize a few.
The “best of” MLS listings so far…
- Why not try your hand at selling your house for what it was worth before it flooded? If you are so inclined you sure can go for one of these gems. The problem is you will never recapture any dollar you spend after buying the house. If the house next door sold for $160K last year before the area had a stigma of a flood plain and it takes $120 to rebuild a kitchen, 2.5 bathrooms, as well as all the flooring and walls, why should you pay more than $40K? One of the listings just dropped $26K last week, but it still 10K above what a house sold for around the corner last year. While the cheaper house MLS listing openly admitted it needed updates, at least it was habitable. Running water, a toilet, and other luxuries like walls and no mold seems like a good value for 10K less than this new MLS offering. I’ll pass.
- How would you like to live on the major highway through town? If you are in the process of downsizing there is a small one bath house for you! Especially if you like sideways photos in an MLS listing. The listing has been on the market for over a month. At this point investors have gone door to door knocking and giving ‘as-is’ cash offers to homeowners. It seems they missed this house. Or did they agree with me–waaaay overpriced and bad location.
- There is another listing where I just could not get over the math and one sentence in the description. The following numbers are not the real MLS listing to maintain anonymity, but they are a multiplier of the actual numbers. Let’s say they are asking $150. This same house sold for $185 last year according to the “Price/Tax History”. The questionable sentence: “Priced at lot value”. Considering the previous numbers, you mean to tell me the house is only worth $35K?!? There WAS a nice galley kitchen and there were TWO bathrooms. Meaning this is more than a one bedroom house. There is NO WAY this is lot value. Especially when I can also research what lot value is because there are lots recently sold in the local area. A lot value is more like $40K. It looks like there is mistakenly an extra ‘1’ in the front of my anonymous number.
Level setting your and my viewpoint with the current flooded homeowner’s perspective
Homeowners may or may not have had flood insurance. Flood insurance is special. If they have flood insurance and choose not to rebuild they can sell the house ‘as-is’ for whatever they can and still keep the insurance money. The money is seen as what it takes to find a new house to call home.
If they did not have flood insurance selling a home as is could be to at least get enough for a down payment for another house. Still, they have to pay off the old mortgage. It is a very hard time for these families.
Let’s pretend like we are a buyer of a flooded home
Think about what you are getting into if you choose to buy one of these flooded houses. You know you are getting a roof, framing, plumbing, electrical and a foundation. All but the roof (and maybe even the roof) needs some form of treatment before adding everything else. The framing must be decontaminated, dried and protected from future rot and termites before rebuilding. Outgoing plumbing may need snaking (cleaning) or camera inspection by a plumber to make sure the lines are cleared out from any debris or collapse. Submerged outlets, light switches and the entire panel (if submerged) need replacing. ALL flooring must be removed–even tile.
Depending on the materials used on the exterior of the house, it may or may not be salvageable. Certain kinds of brick are too porous and need replacing. Even worse, many homes in my aunt’s neighborhood have gypsum board on the exterior of the house before brick went up. If not removed this is like keeping the drywall inside your house. Yuck! Yet, the building’s exterior envelope will need to be repaired to keep the outdoors from coming in through infiltration.
How many of these houses currently listed on the MLS have been properly cleaned? My guess–NONE. One listing boasted of the homeowner bleaching the house twice. Do you know what bleach does? Make it smell better. It does not kill the mold. It does not remove the ick that came in with the water and backed up sewage lines which sat for days before draining out.
So what should be your expectation if you are looking at the housing market after a hurricane?
First off, not everything is ripped out. Sure, the first 4 feet of drywall may be removed. However, so many of these homes still have cabinets. They still have the bathtub and shower enclosure. They still have laminate and tile flooring. Every last one of the houses in my aunt’s neighborhood still has wet gypsum board. Most of the framing has a moisture content over 20% which is a time bomb for rot.
If you bought a house the first thing you have to do is keep tearing it apart. Next, clean it and dry it correctly. Only then can you safely start rebuilding it–basically from scratch. If you buy a full price “house” and then have to pay more to remove material then add it all back you will never see that money again. When you are buying in a housing market after a hurricane the upfront numbers HAVE TO make sense before jumping into one of the flooded houses.
There might be a reason why these particular MLS offerings are still listed. I expect they will be there for a while.