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Hurricane Florence and Real Estate

Posted Saturday, September 22, 2018

Hurricane Florence is the worst storm that ever hit Carolina in decades and analysts believe it will have a negative effect on retail, insurance, restaurant, and agriculture industries. Equity investors are focusing more on the disruption and the damage the impending storm will create. The storm is forcing more than one million people to evacuate their homes, and it is expected to wreak over 26 billion in damages. That means you will be seeing a lot of “sell my house” notices within the target states. 

Certain restaurants located in Carolina such as Zoe’s Kitchen, Carrols Restaurant, and Bojangles Inc. might take a hit from Hurricane Florence. Carrols Restaurant has 23% of its store located in Carolina while Zoe’s Kitchen has around 12%. With almost 60% of its store base within Carolina, the shares of Bojangles have dropped in the last couple of days. 

The other sector that may find itself on the hook once the storm hits is the insurance industry. The Hurricane may cause approximately 15 billion dollars to 20 billion dollars in insured losses from coastal storm surge and wind. Ahead of these expected claims, S&P 500 have dropped by more than 2% in the last week, while there is only a slight change in the broader benchmark. 

Retail companies might also get affected once the storm hits. More than 10% of stores owned by Dollar General and Dollar Tree are located in the target states. However, according to analysts, purchases to get ready for the storm might be partial offsets. As for the departmental stores in Carolina, Dillard’s is most vulnerable because 9% of its outlets are located in the storm’s path. 

According to real estate experts, damage from Hurricane Florence is likely to disrupt home construction and national home sales for several months. The expected rainfall and flooding may cause damage even to other properties outside the storm’s path leading to a reduction in national house trends. “Sell my house” notices are likely to increase but there will be a drop-off in property demand in these states as prospective buyers reconsider whether to settle in these areas. 

Other sectors that might get affected by the hurricane are auto-part suppliers, building materials and cement stocks, as well as hotels and airlines due to possible cancellations. According to analysts, this event might on the other hand benefit transport providers as well as companies that major in roof repairs and disaster-related services. Lowe’s Cos. And Home Depot Inc. for example, both attained all-time highs in the past week. Generac Holdings, a company that manufactures generators reached its highest since 2014 when it rose by more than 8% over the last couple of days before issuing returns on Wednesday.