Greetings from The Grand Strand!
I planned to talk about another subject this month but
Hurricane Irma got in the way
.
This was a monster of a storm.
It had the
most powerful winds ever recorded in the Atlantic
. It will be
one of the most financially destructive hurricanes in history
. And of course this follows the
massive flooding problems caused by Harvey in Houston
. At least we dodged a bullet here in South Carolina (two bullets!), right? Not so fast.
There will be consequences for those of us living and/or owning on The Grand Strand.
First, even though the storm center did not come within 500 miles of us, the wind field was so big that
we still experienced a storm surge, wind and rain sufficient to cause significant beach erosion, not to mention the loss of about a week of business.
There was also
some flooding
, though not severe.
The bigger effects for us will come later.
The following comments are not based on extensive research. At this time this is just "educated speculation" based on my past experiences and a little bit of common sense.
Insurance costs will increase
, probably for everyone in the country, but
especially for anyone in the areas along the east coast and the gulf.
The insurance companies are claiming this won't happen but it's happened every time there has been a financially costly storm in the past.
The last big spike occurred the year after Hurricane Katrina hit New Orleans. Insurance rates may remain higher for several years.
Fortunately, South Carolina has taken a free market approach, welcoming numerous insurers and allowing them to charge market rates. In the past, this has resulted in rates normalizing within a few years as a result of healthy competition.
Some other states have taken a different approach, keeping rates artificially low with the states (actually the taxpayers) on the hook for the difference if a big loss occurs. This approach also causes many insurers not to enter the market in these states because the rates are too low for them to make a profit thereby reducing healthy competition..
With luck, the insurance increases for properties in our areas will be relatively small. The losses were much lower than originally anticipated ($35 billion to $80 billion instead of hundreds of $billions).
Another possible effect on our market is a probable increase in construction costs. Building materials, skilled labor and other resources will all be pouring into Florida and Texas. The laws of supply and demand will almost certainly cause construction costs to increase.
Again, we have seen this before. This will probably increase new home prices and could affect planned commercial construction projects.
Ironically, this might actually help resales of existing homes. One of the difficulties home sellers have faced in recent years is competition with comparable new homes which can be purchased for the same amount of money or less.
One other potentially beneficial result is that our area may see increased business over the next year or so. When disasters have damaged other vacation areas frequented by visitors in the eastern half of the country, some of them have ended up coming to Myrtle Beach instead.
This happened when Hurricane Sandy wrecked beaches in New York and New Jersey and when the oil pipe leak fouled the beaches of the gulf a few years ago. With widespread damage in Florida, the Keys and beaches in Texas, there will certainly be at least a few extra people coming our way.
That's all for now. All the usual reports and my Best Buy lists are included.
See you at the beach!
This monthly newsletter feature shares press releases that caught my eye in the previous month.
