HURRICANE FLORENCE
At least 35 killed
in devastating floods
Construction opportunities ahead as recovery bill
to be between $38 and 50 billion – or more
North Carolina Construction News staff writer
As North Carolina's death toll from
Hurricane Florence reaches 35 (there
are additional fatalities in South Car-
olina), and flooding continues in
Wilmington and other coastal and in-
land communities, how much will
the rebuilding cost, and how will it
affect the state’s construction econ-
omy? Moody’s Analytics estimates
overall storm damages could reach
$38 and $50 billion – more than dou-
ble earlier estimates. Much of the
money will ultimately flow to con-
tractors and builders, especially in
the residential sector, though the
exact impact on the construction in-
dustry is still uncertain.
“We were close to $10 (billion) on
Friday (Sept. 14), CNBC quoted
4 — Fall 2018 — The North Carolina Construction News
Moody’s Analytics chief economist
Mark Zandi as saying. “The flooding
is more extensive than we had antici-
pated and the storm was slow mov-
ing. It hung over the Carolinas a lot
more than was expected.”
Moody’s says Florence is among
the top seven costliest hurricanes
ever recorded.
While the storm wasn’t extremely
strong in wind strength, coming
ashore as a Category 1, its rainfall
set a record, surpassing Hurricane
Floyd in 1999.
“These estimates are based on
the information available, and there
is a high probability that Florence’s
costs will be revised significantly
higher with added information on in-
land flooding,” Moody’s said in an
earlier report.
The damage is unlikely to impact
large home builders, with home buy-
ing activity simply being pushed fur-
ther into the future, not stopped
altogether. “After three to six weeks of sales
disruption due to clean up and elec-
tricity and infrastructure restoration,
sales should return to positive year-
over-year levels by year end,” JMP
Securities analyst Peter Martin wrote
in a research note. “Given enhanced
building codes for new homes, we
expect most damage to occur to
legacy existing homes, which should
create improved long-term demand
for housing.”
Martin said that is what happened
last year after hurricanes Harvey and
Irma in Texas and Florida. The dam-
age caused some concerns in the re-
sale market, as potential buyers
feared hurricane damage.
“I expect builders to say, we’re
going to have some cleanup ex-
penses,” Martin said in a published
interview. “A couple of houses are
damaged, but we'll defer closings.”
“We are thankful that as far as we
know, none of our employees have
been injured during the storm and
subsequent flooding over the past
few days, however many have dam-
aged homes and some have been
displaced by the flooding,” he said.
While the storm didn’t severely
harm North Carolina’s biggest
metropolitan centers of Charlotte
and Raleigh/Durham, thousands of
homeowners and many businesses
experienced the extreme flooding in
several communities.
As an example, the North Carolina
Military Business Centre (NCMBC)
reported that its costal offices, in-
cluding Wilmington, Jacksonville,
Havelock and Moorehead City, had
to close because of the flooding. As
Building material prices may rise,
in part because of increased de-
mand, supply disruptions, and (only
indirectly related to the hurricane),
President Trump’s tariffs on imported
products, including Canadian soft-
wood lumber.
As an example, Louisiana-Pacific
Corporation said that its engineered
wood operations in Wilmington have
been temporarily shut down, which
suffered some damage during the
storm. LP says 149 employees work at
the Wilmington plant, among 700
people at three locations in the state.
The company’s operations in Roaring
River and Roxboro were not im-
pacted by the storm.
“Our thoughts and prayers are
with those impacted by this storm,
especially our employees,” LP CEO
Brad Southern said in a statement.
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The North Carolina Construction News — Fall 2018 — 5