In this fifth installment of our continuing series examining reconstruction cost increases during the 2012–2016 housing recovery, we take a closer look at trends in the South. This region experienced the nation’s slowest rate of cost increases—with one very notable outlier.
Washington, D.C.—moving fast in the slow-growing South
Coming in at an average annual rate of 2.6 percent, the South ranked lowest overall in the nation in reconstruction cost increases during the years spanning 2012–2016. But then it grew faster in terms of material composite costs in 2016.
South Atlantic, East South Central, and West South Central states
The South is divided into three subregions: South Atlantic (District of Columbia, Delaware, Maryland, Virginia, North Carolina, South Carolina, Georgia, and Florida); East South Central (Kentucky, Tennessee, Mississippi, and Alabama); and West South Central (Arkansas, Louisiana, Oklahoma, and Texas). Within this region and in the United States overall, Washington, D.C., led in reconstruction cost increases over the five-year period, at 4.3 percent. Indeed, during the period, the U.S. capital had the distinction of holding the record for highest reconstruction cost growth in the nation.
In the East South Central subregion, Kentucky and Tennessee grew at 2.6 percent, while Mississippi and Alabama grew at a 2 percent average annual growth rate. In the South Atlantic subregion, Maryland and Delaware grew at an average annual rate of 3.2 percent. Virginia, South Carolina, and Georgia recorded an average annual growth rate of 2.7 percent. North Carolina grew at 2 percent. Florida experienced a 1.8 percent average annual increase, which was the lowest growth rate in the nation. Meanwhile, the West South Central subregion underwent minimal change during the period.
D.C. remains an anomaly
In real estate, it’s all about location. And the location of Washington, D.C., at the nation’s political epicenter makes living there expensive. In fact, recent news headlines suggest that D.C. has some of the priciest residential real estate in the country. As a result, there’s a perpetual need for housing, and this need—coupled with an increase in construction activity to meet market demand—continues to drive reconstruction cost growth in the capital city.
The data used for this analysis comes from Verisk’s 360Value® database, which is compiled by Xactware. Xactware uses a research process that tracks costs from tens of thousands of contractors and claims adjusters, extensive material and labor cost surveys, and an analysis of more than 5 million actual damage repair estimates for claims each year.
Scott Amussen is vice president of property products for Verisk Insurance Solutions–Underwriting. He was an assistant vice president for Xactware's 360Value. He can be contacted at email@example.com
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