It's a storm that no one will ever forget, and its effects will be felt for years to come.
Hurricane Katrina briefly hit south Florida before flitting across the Gulf of Mexico. The storm made landfall on August 29, battering Alabama and erasing coastal towns in Mississippi. But it wreaked the most havoc in Louisiana, where surging waters were too much for the levees that protected New Orleans from Lake Pontchartrain, just north of the city and a few feet higher in elevation. The breaches caused the lake to begin to empty into the city, eventually flooding roughly 80% of it with up to 20 feet of water.
In terms of the amount and the value of property destroyed, it appears this will be the largest natural disaster in U.S. history by a significant margin. Frank Lepore, public affairs officer at NOAA's (National Oceanic & Atmospheric Association's) National Hurricane Center, says that it will take some time to sort out the exact numbers, but he expects that it will cost a lot more to repair the damage than the roughly $45 billion spent to rebuild Florida after five storms hit the state last hurricane season. Early estimates of the damages from the storm topped $100 billion, with indications that it could climb much higher.
To give another historical comparison, when Hurricane Andrew hit what is now Miami-Dade County in Florida in 1992, approximately 28,000 housing units were destroyed, according to a report released by the National Association of Home Builders (NAHB) in Katrina's aftermath. According to news reports, the Army Corps of Engineers estimates that 160,000 homes in New Orleans will have to be demolished due to contamination and lack of structural integrity as a result of prolonged exposure to floodwater. And that's in addition to the homes destroyed in Mississippi and Alabama. Reliable estimates for damage in those areas were unavailable at the time this article went to press.
Katrina is unique in that it is really two natural disasters in one. In Alabama and Mississippi, structures were damaged and destroyed by a combination of wind, rain, and a “storm surge” that pushed a nearly 30-foot-high wall of water from the Gulf of Mexico inland at high speeds. Although it's certainly a tragic, destructive, and costly event, the extent of the damage in those states is more in line with what we've seen when a major hurricane makes landfall in a populated area.
But then there's New Orleans, where the destruction comes not from high winds or raging waters, but from extensive flooding due to the storm surge overwhelming the city's levees. Preliminary estimates suggested that pumping all of the water out of the city would take between three to six weeks.
Because of its unique nature, it is impossible to compare Hurricane Katrina with other natural disasters, and it's therefore difficult to precisely predict Katrina's impact on the building industry. (Specific numbers quoted in this article date from mid-September.)
Building materials. It seems intuitive that demand for building products relative to supply would increase — along with prices — in the wake of such a huge natural disaster. Homebuilding and remodeling activity are already at record levels, and the number of homes that will need to be rebuilt is in the neighborhood of 10% of annual housing starts. Indeed, after Hurricane Andrew in 1992, plywood prices rose 45% and prices for Southern pine framing lumber increased 17%, according to the NAHB report. However, the report went on to say that no such price increase occurred after last year's hurricane season.
Craig Adair, marketing research director of APA – The Engineered Wood Association, released an estimate of the amount of wood products that would be needed in the aftermath of Hurricane Katrina. The release, dated September 7, concludes that “in the case of structural wood panels and engineered wood, this volume would be relatively easy to supply.”
Kermit Baker of the Joint Center for Housing Studies at Harvard University says that there may be a slight price increase for certain materials, such as plywood, in the short term, while the emergency response takes place. However, he predicts that in the long run, once rebuilding starts, there won't be a dramatic price increase. “There's flexibility in the system,” he says, explaining that the manufacturers will know ahead of time how much material will be needed for the rebuild.