Average annual losses for residential real estate due to storm surge from hurricanes amount to $2 billion today, but that projection could increase to about $3
What causes a real estate to lose in value?
There are many different types of value. The two I focus on to make my invest decisions are;
Market value. Market value is always moving. It has many many influences. As an investor I keep my eye on it but don’t invest a lot of thought in it. I do pay a lot of attention to demographics and qualities of the building stock because they do determine the likely extreme market values.
Economic value. Economic value is yield, capitalization rate or some other measure of profitability. This value is the most critical for making decisions. Buying when the market offers you a high economic value and selling when the market offers you a low economic value (prices are inverse) is fundamental.