After Katrina Hurricane Katrina's impact on the overall economy and on the housing market is still unclear, but the number of homes destroyed is almost certain to dwarf the losses from any previous U.S. natural disaster. The number of housing units made uninhabitable and beyond economically justified repair by Hurricane Andrew in 1992 was estimated at more than 28,000. The combined effects of hurricanes Jeanne, Ivan, Frances, and Charley in 2004 was almost as large, with nearly 27,500 housing units destroyed.
In those cases, winds and the immediate force of the storm surge caused most of the destruction. Katrina also caused widespread immediate damage, but it is the flooding that likely will translate into a much larger number of homes destroyed. Many homes will be uninhabitable: The floodwaters carried contaminants that cannot easily be removed, and even if the water were clean, prolonged submersion would cause structures to be damaged beyond repair. This is likely to be the fate of a large share of the more than 200,000 homes in New Orleans.
Rebuilding will have to wait, as the immediate focus will be on cleaning and repairing the damage to still-viable structures. This process will absorb much of the construction labor in and around affected areas as well as several key materials that would otherwise have been used to build new homes. The materials that will be most affected include roofing and wood panels (plywood and OSB). Demand for other materials, such as concrete, is likely to decline initially as projects are canceled or delayed during the initial recovery period.
There will also be an impact on the supply of materials. The affected areas have a significant number of wood-product facilities that may have been damaged or destroyed. (On the other hand, trees that were blown down will need to be harvested on an accelerated basis, perhaps helping to lower wood-product prices in the medium term.) And imports of building materials will be disrupted by the damage to port facilities. In 2004, New Orleans was the top spot for imports of cement and a number of other building materials into the United States.
Buffalo Quarter For the second quarter of 2005, the metropolitan statistical area comprising Buffalo and Niagara Falls, N.Y., was the nation's most affordable housing market among major metros with populations over 500,000, according to the NAHB/ Wells Fargo Housing Opportunity Index (HOI). In Buffalo/Niagara Falls, nearly 90 percent of new and existing homes sold during the second quarter were affordable to families making the area's median income of $57,000. The median house price was just $75,000.
In second and third place on the HOI were Indianapolis and Dayton, Ohio, respectively. Ohio had the greatest number of major metros on the top 10 list, with a total of four. The state also had three of the 10 most affordable metro areas with populations under 500,000.
Green Party The NAHB has announced that the 2006 National Green Building Conference will be held March 12–14 in Albuquerque, N.M. Sessions for both green building specialists and mainstream home builders will address building science, design, and marketing, among other topics. For more information, go to www.nahb.org/greenbuilding.
Learn more about markets featured in this article: New Orleans, LA.