How the storms could help the housing market in the South
Tuscaloosa tornado damage.
Steve Chiotakis: Alabama Governor Robert Bentley now says insured losses from the deadly tornadoes last month will top $2 billion. Thousands of homes were damaged or destroyed by the storms. And some say that could actually help Alabama's slumping housing market.
Lary Cowart is a real estate expert and professor of accounting and finance at the University of Alabama at Birmingham and he's with us now. Good morning.
Lary Cowart: Good morning. How are you today?
Chiotakis: Doing well. We're obviously not trying to find any kind of bright side to the devastation in Alabama; I saw it certainly first-hand in Tuscaloosa. But people are going to need housing, right?
Cowart: There's over 5,000 houses destroyed in two counties, plus there's another 1,000 distributed over a much wider area. Here in Birmingham, there's sufficient supply to take care of all the people who were displaced.
Chiotakis: What does this mean for the housing situation in Alabama?
Cowart: Well in Birmingham, there's about 10,000 to 12,000 houses on the market for sale right now. And at the current rate of sale -- based on last month's sales -- it would take 12 months for every one of those houses to be sold. Of course now, we're going to get to the bottom of the market a lot quicker than in other places, so for us, this will kind of start the absorption to get us back to a normal market.
Chiotakis: Thousands of people, as you said, lost everything in those storms. Where is the money going to come from, Lary, to buy up these properties all over the state?
Cowart: In the short run, there's going to be an inflow of cash to cover the insurance costs for those people who had insurance -- the federal government, the state government; there's a lot of donations that are bringing things into the Birmingham area to try to help everybody out. The cost of this is going to be significant; the estimates right now are $2 billion to $5 billion. And going up everyday. The long-term damage is going to be pretty significant.
Chiotakis: Well our thoughts, of course, are with the folks in Alabama and all throughout the South as they try to recover from these horrible storms. Lary Cowart, professor of real estate and finance at UAB, thank you so much.
Cowart: You're welcome, nice talking to you.