On Repairing/Rebuilding 100,000+ Damaged Houses, by Charles Hugh Smith

Rebuilding Houston is going to be expensive and difficult. From Charles Hugh Smith at oftwominds.com:

Almost lost in all the dollar estimates of property damage is the human loss, suffering and stress.
I am not an expert in repairing flood damage, or in dealing with insurance companies, FEMA or all the other pieces that will go into homeowners getting the funding needed to repair or rebuild their homes.
But I do know a bit about construction after 44 years in the field, and I have been soberly reflecting on the many hurdles that face everyone involved in restoring / repairing tens of thousands of homes, more or less all at the same time.
Preliminary estimates set the number of flood-damaged homes in Houston at around 100,000. More recent estimates put the number at around 40,000.
No one yet knows how many homes in Florida have been damaged by Hurricane Irma, but the number will undoubtedly be a big one.
Here are some semi-random thoughts on the challenges of repairing/rebuilding so many dwellings in as short a period of time as possible:
1. The average cost of homes in Houston is reportedly around $300,000. Many coastal areas in Florida are similarly valued. Just as a guess, many of the affected homeowners probably have mortgages in the $200,000 range.
It’s been reported that only 1 in 6 in the affected areas of Houston have flood insurance, suggesting 85% of those whose homes were rendered unlivable will need to borrow money to fund the repairs.
It seems federal agencies offer homeowners loans for this purpose, or access to what is effectively a second mortgage.
If the repaired home will be worth $300,000–questionable, perhaps, for those houses which have been repeatedly flooded by lesser storms–then how much money will homeowners be willing to borrow to keep the home?
If a homeowner has $50,000 equity and a $200,000 mortgage, and he has to borrow $100,000 to make the home livable and replace all the ruined contents, does it make financial sense to have $300,000 in mortgages on a house that’s worth $250,000? How much is the emotional connection to the home and neighborhood worth?
How many homeowners simply can’t afford to borrow the sums needed?

2 responses to “On Repairing/Rebuilding 100,000+ Damaged Houses, by Charles Hugh Smith

  1. In a lot of cases it is simply not worth it to repair these homes. Despite being hit by hurricanes, Houston area did not have strong building codes, Fl. only has strong building codes near coasts.
    Many of the destroyed homes were not built well to begin with.
    Why spend more than the value of the home to repair it? Plus most contents, including heat/ ac units and all appliances will need replaced.
    Not a good idea for most people.
    Historical homes and buildings tend to get fixed, as do older, better built homes.
    That’s what I saw happening over the 18 months I spent in New Orleans area after Katrina, and around Galveston island after hurricane Ike in ’08.
    If I was 10 years younger- I would be packing the truck, trailer, and camper and heading south sometime in the next few days.
    I had friends who stuck around New Orleans for 5 and 6 years- they said there was still almost endless work in the area.
    As long as you go into whatever city it is and talk to the cops first, then zoning/ building dept,show them your insurance, some references,and if needed- depends on trade and state- your license, you are welcomed.
    Tx had it together, New Orleans was chaos for the first 6 months.


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