Image courtesy of Flickr, coniferconifer
In this article, we examine the potential effects of the Zika virus on the real estate industry in Florida.
In July 2016, Zika virus fears hit South Florida, specifically the popular Wynwood neighborhood of Miami and Miami Beach. The frequent downpours, warm weather, swampy Everglades, and massive amounts of mucky water make Florida an ideal breeding ground for mosquitoes. And, not just an ideal area for a few months. Florida's climate allows mosquitoes to be active nearly year-round.
As the threat of Zika has dampened tourism in Wynwood, some real estate professionals fear that it may affect real estate prices, too. In this article, we examine the potential effects of the Zika virus on the real estate industry in Florida.
You may have heard buzz about the Zika virus, however, what exactly is it?
The Zika Virus is transmitted through mosquito bites. Common side effects include fever, rashes, join pain, muscle pain and headaches. These symptoms can last for several days to a week. In extreme and very rare cases
It's most harmful when it is transmitted in pregnant woman to their unborn child. Zika infection during pregnancy can cause a birth defect of the brain called microephaly and other severe fetal brain defects.
Just recently , the Zika virus has been connected with another virus known as Dengue. Dengue is more common in the Middle East and is a close relative of Zika, causing similar symptoms and threats.
As previously mentioned, Florida is the perfect breeding ground for mosquitos, which makes the risk of the virus real.
Florida's health department has reported 125 locally transmitted cases of Zika virus infection and another 700 cases carried by travelers or sexually infected by travelers. Among the total, 92 are pregnant woman.
Along with hurting Florida's $90 billion tourism industry, the virus poses a real threat for the real estate market.
Many buyers are avoiding purchasing property in South Florida and if the virus continues long enough, housing values may plummet. This shift in Miami's real estate a harsh difference from recent years. Previously, Miami experienced a booming housing market, specifically the trendy Wynwood neighborhood which has since been hit with the Zika virus.
An August report from Property Tax Appeal Group , a group that provides expert and professional real estate ad valorem appeals on tax assessments in South Florida, says that if the fear continues long-term, it could cause businesses to close, which would depress overall real estate values.
Trulia, a popular real estate website, gathered data from the past year on median sales prices in the Wynwood neighborhood. The data actually shows a slight increase in home values for the trendy area, with the exception of 1 bedrooms falling an negligible amount:
As you can see from Trulia's chart below, the outbreak of the Zika virus in July of 2016 does not appear to affect median sales prices in Wynwood.
However, the number of sales drops significantly in September of 2016. This could be a real indication that the Zika virus is affecting the real estate industry in Wynwood as homebuyers are looking to settle down in other areas of the state.
Mark Melikian from Summit Valuations, a full service valuation company, analyzed the real estate market nationwide and highlighted Zika's impact on South Florida's residential real estate market.
Melikian explains that past environmental events have impacted the local residential real estate market and has drawn similar conclusions with the Zika virus.
Melikian notes , ''While it's too early to tell what impact Zika will have in Florida, we can take lessons from previous environmental events, such as the 1979 nuclear power plant accident at Three Mile Island and the 1982 volcanic eruption fear in Mammoth Lakes, California. Our analysis indicates that residential real estate prices may decline in the impacted markets, but are then likely to level or recover over an extended period of time. We will continue to monitor this situation.''
Based on these comparisons it seems like residential real estate prices may decline in the impacted markets in South Florida, however, it may be too early to get an accurate indication of any impact that Zika virus fear will have on these residential real estate markets.
Historically, as businesses and restaurants close, this is a real indication that residential real estate prices will decline, so it will be important to keep a close watch on market trends in South Florida in the future.
On September 28th, Congress agreed to allocate $1.1 billion to help fight the spread and effects of the Zika virus. This deal comes after a lengthy partisan disagreement with nearly seven months of bickering.
In a recent statement, Senator Patty Murray, D-Washington, the ranking member of the Senate's Health Education Labor and Pensions Committee released a statement about the deal:
"Women's health should never be treated like a political football. I am glad that Republicans finally agreed to set aside the extreme provisions that would have specifically blocked Planned Parenthood health care providers from accessing critical funding."
The recent deal reached in Congress includes $394 million to help control Zika-carrying mosquitoes and another $397 million to help develop a vaccine against the virus and better tests to help diagnose cases of Zika.
There is also $66 million allocated to health care for people affected by Zika in Puerto Rico and other U.S. territories.
The New York Times explains that the vast majority of Americans have little to fear from the Zika virus explaining that ''for almost everyone, including older adults, younger children and people with compromised immune systems, it is a mild disease the usually causes nothing more serious than a low fever and an itchy rash.''
Of course you should consider your own circumstances, health, and personal concerns; however, it is a relief to hear that it may not be worth avoiding South Florida all together if considering buying property or going on a vacation.
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