Harvey is estimated to have caused $150 to $200 billion of damage as of September 9, 2017. The first damage loss estimates were about $50 billion.
But who will benefit and who will be hurt?
Answering that question is our objective.
Texas gross domestic product (GDP) is estimated to be $1.6 trillion per year. Houston GDP is about 30% of Texas GDP, or about $0.48 trillion, or about $480 billion. Spending $50 to 100 billion on real estate repairs and purchases of new cars generates an increase of about 10 to 20% of GDP for Houston.
Construction workers and businesses, apartment owners, office building owners, suppliers of construction material, will all benefit from Harvey. There will be billions of dollars of construction work; so much construction workers will be in Houston for a year or more. Those displaced by Harvey will help absorb tens of thousands of houses and apartments.
Houston Housing Market
The single family market is tight with only 3.7% of inventory available for lease or sale as of late July. There is now just over four months of inventory available for sale in Houston. It is a healthy home market with low appreciation, two to five percent. However, the apartment market is about thirteen percent vacant. There are about vacant 86,000 apartments and about 49,100 houses available for sale or lease, for a total of 135,100 housing units available.
Harvey flooded 119,000 houses in Harris County, or about 13% of all houses, versus 55,000 houses flooded by Allison. Harvey caused 216 percent the number of houses flooded, compared to Allison. The guest workers from out of town to help with repairs will further stress the limited amount of housing available, including hotels and motels and shelters.
Millions of square feet of office space will be absorbed from companies displaced by Harvey. Office space is more than twenty percent vacant. However, this is just a short term benefit.
However, the cost to rebuild housing and commercial real estate will be substantial, perhaps $100 billion.
Who Will Lose?
Likely half a million to a million people have been impacted by Harvey. The number of those negatively affected by Harvey is much larger than the number of those who benefit. This includes those whose house flooded, business flooded or car flooded. Those most tragically affected include those least able to incur a loss or hardship. They have no reserves and losing everything literally means losing everything.
It includes people living in apartments and homes that flooded; owners of businesses that flooded; those not paid during days off, owners of cars flooded. Those tragically affecting includes everyone whose house, business car flooded and more. Employees of companies flooded may not be paid while the business is shut. Many small businesses will not be able to recover from Harvey. In addition to the initial flood, many home owners and business owners flooded by Harvey did NOT have flood insurance. Only 20 percent of those flooded are estimated to have flood insurance. Our office was flooded by Allison. Our office was flooded by Harvey. There are financial, emotional and physical aspects to the stress of flooding. The human toll of having been flooded is difficult to explain. However, it is intense and dramatic.
P.S. I had office buildings on 2 continents flood within one week in August.