Natural Distasters & Home Prices

Some of the hottest RE markets are those most prone to natural disasters. Think Florida and California. How would a large earthquake or a Hurricane affect housing prices? Presumambly it would reduce supply by physically reducing the number of houses. But the demand curve would also fall for housing in the area.

However, despite last year's strong hurricane season prices in Florida inreased tremendously.

Three Florida metros led the nation in price growth. The strongest price increase was in Bradenton, where the first quarter price of $275,100 rose 45.6 percent from a year earlier. Next was Sarasota, at $326,300, up 36.0 percent from the first quarter of 2004. Third was the West Palm Beach-Boca Raton-Delray Beach area, with a first quarter median price of $362,800, up 35.9 percent in the last year. (National Association of Realtors)

Furthermore, getting Hurricane insurance on homes in Florida is more expensive then in the past. The Hurricane season begins on June 1st, we see will what affect it has on home prices in Florida.