Why Disasters Like Ian Punish Affordable Housing Stock In Particular

A great variety of property types was at risk of damage or destruction when Hurricane Ian made landfall in Florida Sept. 28, but the state’s already-dwindling supply of affordably priced homes took the biggest hit, demonstrating the elevated threat natural disasters pose in lower-income communities.

Previous disasters have proven affordable housing takes the most damage and is least likely to be replaced in an area’s housing ecosystem, leaving a gap where cheaper properties used to be and removing options for lower-income residents. 

"Not only did we slow down the projects that were underway, we’ve reduced the supply available for anyone to use,” said Shelton Weeks, the director of the Lucas Institute for Real Estate Development & Finance at Florida Gulf Coast University in Fort Myers.

“At the lower end of the rental spectrum, I don’t expect that to be built back," Weeks told Bisnow. "When we look at our cost per SF, the cost associated with permitting, the labor cost, just focused on apartments, it’s very difficult in southwest Florida to bring a project to market where you charge less than $2K a month. The lower end of the market, I don’t know how we replace that.”

CoreLogic put its latest estimate of Ian’s damage between $41B and $70B, but the scope of the destruction, both to affordable housing and to property in general, hasn’t been fully tallied. 

Considering the concentration of lower-income households in some of the places impacted by Ian, the loss among the affordable housing stock in Florida is likely to be significant.

When Hurricane Katrina hit southern Louisiana and Mississippi in 2005, 20% of the 82,000 rental units that the storm damaged or destroyed in Louisiana were affordable to extremely low-income households, according to the nonprofit Opportunity Agenda.

More than a decade after Katrina, New Orleans hadn’t recovered much of its affordable housing stock, according to a report by the University of North Carolina that detailed what happened to the St. Bernard neighborhood in the city.

After the storm, resident redevelopment occurred at higher price points than before, while median housing incomes didn't gain as much, rendering a lot of the neighborhood unaffordable to much of the population. 

Though the damage to upper-end properties and marinas in areas like Fort Myers and Naples received considerable attention in the wake of Hurricane Ian, many households in the path of the storm were occupied by low-income residents in lower-rent properties, though rents were rising rapidly before the disaster.

Twenty-eight percent of renter households in Lee County, Florida, are low-income, according to a report by the Shimberg Center for Housing Studies — low enough to be cost-burdened by their rents, or devoting 40% or more of their income to pay for shelter. 

The Shimberg Center’s threshold for determining who is cost-burdened differs from the longstanding number used by the Department of Housing and Urban Development, which says that families paying 30% of their income for their shelter are considered cost-burdened.

The impact of disasters falls disproportionately on lower-income rental houses, which are more likely to be occupied by people of color, according to a 2017 report by the Harvard Joint Center for Housing Studies.

Research has also shown that rental units take the longest time to regain their pre-disaster appraised values in numerous disasters, said associate professor Michelle Meyer, who is director of the Texas A&M Hazard Reduction & Recovery Center.

“There are several reasons for this,” she said. “The property owners might not have insurance on the rental properties. The owners might also have their homes damaged and focus on repairing their primary residence first. Also, a lot of people are looking for housing at times like this, so many units will be taken by people who are displaced, thus increasing demand and prices.”

Affordable housing is more vulnerable to damage from disasters from the get-go, Meyer said, because it has historically been built in risker areas like floodplains and is often made of lower-quality materials with fewer mitigation strategies added to the structures.

“Once damaged, affordable units are the slowest to recover to their pre-disaster state often because their owners — if owner-occupied — are likely lower-income and won't have the resources available to rebuild immediately,” Meyer said.

Lower-income homeowners without insurance have to go through the long application and approval processes for the Federal Emergency Management Agency, the Small Business Administration, and nonprofit or other government programs so they can rebuild, Meyer said.

In the Southern U.S., many affordable options are mobile homes that are more vulnerable to damage and slower to recover due to different aid rules that apply to those structures, she said.

“Mobile homes in mobile home parks face the extra hurdle of the park owner having to recover and reopen and then the homeowner having to recover and reopen,” Meyer said. “Often, various regulations tied specifically to mobile home zoning and mitigation strategies slow decision-making for both park owner and mobile unit owner.”

Disasters like Hurricane Ian have both immediate and longer-term impacts on affordable housing markets.

After Ian, many homeowners and renters were forced to leave their homes due to damage and can't find any available rentals, much less affordable rentals, according to Family Promise of South Sarasota County Executive Director Jennifer Fagenbaum, whose organization provides shelter and other necessities to area families.

“Because of the increase in demand, which was already high, landlords have again raised rental prices for units on the market,” Fagenbaum said. “One family told me they were looking at a two-bedroom rental just days before the hurricane. It's still listed for rent, but the cost has increased another $400 a month to $2,400.”

And after a storm like Ian, finding any residence at all is difficult, irrespective of price point.

The damage to so much housing, affordable or otherwise, puts immediate upward pressure on rents for the surviving inventory, at least temporarily.

“You’re looking at thousands of people who are trying to find displacement housing,” Fort Myers resident Kristen Santero, who was displaced by Ian, told the Washington Post. "I think it’s going to be very difficult."

Fagenbaum expressed hope that Ian's aftermath won't mean more delays in the development of new affordable housing in the area but said that there were already supply chain and workforce delays in building.

“This has only been made worse by the disaster,” she said. “One of our volunteers told us that before the hurricane, he was looking to have his tile roof replaced and was told that due to material shortages, he would have to wait two to three months. The company just let him know that that time frame is now six months.”

Since the beginning of the pandemic, affordable housing has been increasingly hard to locate for tenants, locally and nationally, ReVital Development Group President Michael Allan said. 

“The devastating damage caused by Hurricane Ian has exacerbated the already-dire affordable housing crisis in Lee County, dramatically increasing the amount of homeless households, and so [too] the need for new affordable housing,” Allan said.

While it is still too early to determine any potential delays or impacts to future developments, Allan said his company's initial assessment is that it doesn't anticipate any delays for projects starting construction in 2023.

ReVital, in partnership with the Lee County Housing Authority and Birdsong Housing Partners, is developing a 96-unit affordable housing community, Civitas of Cape Coral. Allan said that the anticipated schedule for Civitas remains the same as it was before Ian, with construction planned to commence in January 2023. 

“Still, projects looking to start in the fourth quarter of this year might experience slight delays as businesses begin to reopen and local government agencies continue to focus fully on the recovery efforts,” Allan said.

Ethan Rothstein contributed reporting to this article.