What a hurricane can teach us about market uncertainty

What a hurricane can teach us about market uncertainty

As Hurricane Ian swirled toward the west coast of Florida in September, the fear of physical damage was exacerbated by another destructive, if less specific, force: acute uncertainty.

In recent years, chronic upheaval, punctuated with bouts of chaos, may have become the “new normal.” However, sharp spikes in uncertainty — whether from the impact of a hurricane, a sudden reversal in real estate markets, or abrupt geopolitical shifts — still have the power to disrupt, dislocate, and reverberate.

It is particularly problematic in the residential real estate business when dramatic real-time images and intense coverage of extreme weather events create enduring perceptions of risk that linger long after recovery is well underway.

Although the most carefully crafted plans are often blown off course (literally) by unexpected circumstances, they remain an invaluable tool. Thoughtfully organized response strategies identify priorities, establish clear channels of command, and provide a reassuring framework to a broad audience that might otherwise be left in a vacuum, extrapolating the worst-case scenario.

With a solid plan in place, it is possible to be more effectively reactive, pivoting to specific, positive measures more quickly. At Peerage Realty Partners, we saw the benefit of such detailed plans as our Florida-based partners at Premier Sotheby’s International Realty, proactively confronted the approach of Hurricane Ian.

In advance of landfall, the leadership team circulated a document with a prominent hotline for all employees, advisors, and clients. It provided complete contact information for each office, articulated the explicit roles and responsibilities of every individual in the organization, provided a detailed supply checklist for securing office equipment, and included a facility damage report form. It also recommended credible sources of information and provided a simple glossary of meteorological terms and provided many other resources that helped to package the and process the unknown.

While this plan was fundamental to the rapid restoration of services in the aftermath of Hurricane Ian, it was Premier SIR’s strong culture and community, that made the difference between having a plan, and ultimate performance.

The parallels between a well-structured hurricane response plan and the 2023 budget and planning process now underway in most real estate brokerages, are close. That means it is more important than ever to build something sturdy that will weather the inevitable storms — not just cruise through calm water.

Over the past several months, residential real estate markets across North America faced the “perfect storm” of tight supply and uncertainty as inflation kicked in and interest rates soared. Although in many cases, the budget plans for 2022 have fallen short of specific targets established a year ago because of unforeseen events that are beyond our control.

However, if anything, the increased opportunities for growth that arise from disruption make the mindful process that underpins budgeting and planning even more valuable. After all, a current road map is the only way to know where you are going — even if there is a detour or two along the way.

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