I COULDN'T BELIEVE MY EYES AS I WATCHED THE INCREDIBLE human suffering and physical damage inflicted by Hurricane Katrina: people being airlifted from roofs, homes floating down what were once streets, people sifting through rubble for traces of belongings or relatives, corpses draped with blankets on porches as rescuers searched for the living.
The storm is likely to go down as the worst natural disaster in this country's history. It will also leave an indelible impact on the American psyche, particularly in the way people perceive their homes.
HOME IS WHERE THE HEART IS As difficult as these scenes were to watch, they also highlighted the incredible psychological bond that people have with their homes. Some citizens of New Orleans and Biloxi, Miss., clung to the perceived safety of their homes almost irrationally, even as certain disaster approached. After the storm, Biloxi residents who had left frantically returned, searching through the wreckage for survivors and belongings. Many people personally and publicly confronted homelessness for the first time in their lives.
People throughout the country responded to their plight with outpourings of generosity. Some opened their homes to complete strangers. Others took up collections to replace belongings swept away by the storm. It's as though we all contemplated the fear of not having a place to call home and took sympathy on those who had actually had this happen to them.
As of this writing, no one knows how many people had died in the storm. Estimates of the cost to rebuild what was lost exceed $100 billion. And it isn't clear how many homes have been demolished or rendered uninhabitable due to flooding, though the figure is said to be close to 160,000 homes in New Orleans alone—far exceeding the nearly 27,500 from the four hurricanes that struck Florida last year. It's pretty clear that Katrina destroyed more homes than any natural disaster in the history of the United States.
RIPPLE EFFECTS Katrina affected us not only emotionally, but, as we experienced at the gas pump and the lumberyard, it touched us financially as well. The storm's impact is likely to be felt on the economy for some time, raising insurance rates, increasing federal spending, and holding down interest rates as the economy slows.
It's also likely to spark a national debate about the wisdom of living so close to the shore. Demographics show that Americans, particularly cash-flush baby boomers, are moving in droves to coastal regions, paying incredible sums for oceanfront homes. Developers and builders have responded to this demand with gusto, especially along the Gulf of Mexico, creating some of the nicest resorts in the country.
There will likely be some big increases in insurance premiums for the owners of homes in coastal areas—several insurance companies stopped writing homeowner policies in Florida after last year's quadruple whammy. Coastal building codes may well become even more stringent. And how long will the federal government go on insuring buildings in flood zones?
As we contemplate the rebuilding efforts, one question I keep asking is whether people, after their worst fears were realized, would want to return to the place they once called home. Would the incredible damage and the chaos that followed in the aftermath of this disaster—the deprivation, the looting, the slow government response, as well as the possibility of it all happening again—be enough to keep them away for good? Or will the incredible pull of returning to the place they call home override all their fears?
Learn more about markets featured in this article: New Orleans, LA.