Tuesday, September 20, 2005

Hard to imagine the job ahead

When Hurricane Andrew roared through south Florida in 1992 it flattened somewhere between 25,000 - 28,000 homes (depending upon whose numbers you take) and damaged another 100,000 plus. In terms of financial loss, it was the most expensive natural disaster ever suffered by the United States. It took 11 years to rebuild all the homes that were destroyed. By contrast Hurricane Katrina destroyed 275,000 homes and damaged 200,000. What, 10 times more homes destroyed!!?? That's what the American Red Cross is saying. The scope of the devastation is staggering.

Monday, Sept. 19, Jerry Howard, CEO and Executive VP of the National Home Builders Association, and Dave Seiders, Chief Economist, discussed Katrina's effect on their members. It was enlightening.

In a nutshell, here are a few of the points they made:

1. Not only was a good portion of the Gulf Coast's housing stock destroyed in the storm, so was the region's homebuilding infrastructure. Most homebuilders in the affected region have been temporarily put out of business by Katrina.

2. Cement for rebuilding will be in tight supply, even tighter than before because the Port of New Orleans was the main port for imported cement.

3. Softwood-timber, a large portion of which is grown in the affected areas, will be abundant as damaged forests are cleared, but the long-term supply is uncertain since it will take growers years to replant and harvest again.

4. Plywood prices nationwide jumped dramatically on the heels of the disaster.

5. The NAHB will ask Congress to relax tariffs on Mexican cement, Brazilian plywood and Canadian-grown softwood.

6. If rebuilding follows the same path that other Hurricane-ravaged areas took it will happen in a slow, steady progression; it will take years and years; there will be no huge construction spike.

What's in store for the U.S. housing market nationawide post-Katrina? Seiders predicts a slight slowing of new home construction, at least through the remainder of 2005, but 2006 continues to look strong.

"I think the economy has enough forward momentum to get through this (Katrina) in fairly good shape," he said.

— Ron Hall

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