Love, Money + Real Estate #36

The economic damage and boost from Hurricanes

Greetings -

I’ve watched this hurricane season unfold with horror, with the economic damage pushing 2024’s totals into numbers unseen before. The new estimates for Helene are now $225-250 billion. Milton might cost more than Hurricane Katrina (see graphic below).

Preliminary damage estimates from Hurricane Milton could amount to $50 billion, President Joe Biden said Friday. 

Total expenses from property damage and economic losses could exceed $160 billion, according to an estimate from AccuWeather, which took into the account of long-term health care costs for survivors and disruptions to business and industry.

"Milton will go down as one of the most damaging and impactful storms in Florida history, along with Hurricane Helene’s estimated total damage and economic loss of $225-250 billion just two weeks ago," according to Mark Friedlander, spokesperson for the Insurance Information Institute (Politico).

If Helene winds up costing $225-250 billion in physical damage and lost wages, it will far exceed any of the costliest natural disasters in the U.S. to date. If Milton reaches $150 billion, it will wind up in third place, just behind Katrina. These are not small numbers. If you’re a homeowner in Florida, you are already paying the highest amounts for insurance. These disasters could easily push your premiums higher.

That’s the 30,000 foot view. On the ground, millions of people have been affected in ways big and small, more than I have space to recount. But here are just two examples.

First, in Asheville, NC, leaf-peeping accounts for $3 billion in tourism dollars, according to the Washington Post. Last year, nearly 14 million visitors took advantage, spending nights in local hotels, inns, bed and breakfasts and Airbnbs, sampling local cuisine and craft beers, enjoying nature. Q4 is the way many of these small businesses last through the year.

Explore Asheville reports that many of the county’s 90 hotels have reopened and are housing those involved with recovery efforts. While that’s good, the fight for insurance dollars is just beginning. But many restaurants and other businesses remain closed.

In Florida, the numbers are just beginning to trickle in from Milton. Florida insurance regulators said insurers had already reported more than $586 million in losses from nearly 44,000 claims. Milton hit just as growers were about to pick this year’s orange crop, according to various reports.

So if your orange juice costs more next year, you’ll know why.

Hurricanes are notorious for their destructive power, with the National Oceanic and Atmospheric Administration (NOAA) estimating an average cost of $22.8 billion per hurricane. Beyond the immediate damages, the ripple effects on the economy are profound. Repair efforts from a single storm are projected to support around 90,000 jobs directly, contributing $6.2 billion in labor income and $9.8 billion to GDP.

(NOAA: https://coast.noaa.gov/states/fast-facts/hurricane-costs.htm)

When considering the broader economic impact through supply chains and household spending, the numbers become even more significant.

According to a May, 2024 blog on Implan, a leading provider of economic impact data and analytical applications, recovery efforts from just one hurricane can “indirectly support nearly 248,000 jobs, generate $17.3 billion in labor income, and contribute $30.3 billion to GDP, with a total output of $62 billion.”

Essentially, for each dollar spent on hurricane repairs, an additional $1.72 is generated in the economy, and are distributed across various sectors, including maintenance and repair services, retail, housing, petroleum refining, and banking.

That doesn't mean we should celebrate a hurricane. For people directly affected, it's a true economic disaster. But in our economy, one side typically wins while the other side loses (think stocks - someone sells to someone who buys). If you can weather through (no pun intended), there is often money on the other side.

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Mortgage rates are up and down, but mostly down

According to the Federal Reserve Bank of St. Louis, mortgage rates ended last week at 6.32 percent, up about one-third percent from the low of 6.08 percent in September. It’s a lot better than where we were last November, when interest rates topped off at 7.79 percent.

Interest rates have room to come down further. The Federal Reserve has indicated it will continue to cut the Federal Funds rate slowly, and markets already expect a 25 basis point reduction before the end of the year.

I’m getting a lot of questions about refinancing. First time in a long time.

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Hot reads from BestMoneyMoves.com and ThinkGlink.com

Home Inspection Uncovers Serious Issue

Will Closing Credit Cards Hurt My Credit Score?

Home Sale Tax Exclusion

How to Use Benefits to Stand Out to Top Talent

Here Are The 4 Important Insurance Terms Gen Z Employees Need To Know The Employee Healthcare Crisis: This is How To Help

There are many more posts online. In the next newsletter, I’ll provide links to the many HOA stories we’ve been writing. (If I think about a real estate theme for the year, it’s why so many people are having trouble with HOAs.)

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On a personal note

I’m sorry for the brevity of this newsletter and my recent frequency of publication. But, it has been an extremely busy year. I’ve spent much of the last two months getting our brand new version of Best Money Moves (around the office we call it “3.0” for short) ready to launch.

As we are now officially launching the product this month, I should get a little time back. Between the devastating hurricanes and the election, there’s a lot going on with real estate right now. I’ll catch you up with some of that in my next newsletter.

Thanks for reading. Type to you again, soon.

Ilyce