The number of homes in danger of storm surge damage from hurricanes increased on a year-over-year basis, as more people flock to affordable coastal regions, a CoreLogic report found.
Nearly 8 million homes located on the Atlantic and Gulf Coasts are currently at risk of a storm surge, which could create as much as $1.9 trillion in reconstruction costs from water damage. By contrast, for the
Damage from hurricane-force winds is estimated to impact 31 million homes this season, creating nearly $8.5 trillion in combined reconstruction costs for those homes at moderate or extreme risk exposure.
And in that worst-case scenario, areas with large numbers of homes damaged by storms will see a large number of mortgage defaults in the aftermath.
"To provide a 360-degree view of the impact of climate change, we took a look at the U.S. housing economy after a hurricane strikes and noticed a significant spike in mortgage delinquency rates and loss in housing inventory," Frank Nothaft, chief economist at CoreLogic, said in a press release. "Communities most affected by natural and financial catastrophe include those with already-high delinquency rates such as in Lake Charles, La., as reflected in the pre- and post-Hurricane Laura landfall rates."
Current mortgage delinquency rates are still affected by the economic disruption of the coronavirus, although the Black Knight First Look report for April noted that 30-day late payments are down to 4.66%, with expectations that those will
Based on last year's record 30 named storms, CoreLogic recommended that insurers and mortgage lenders prepare for this year's season by shifting their focus to loss prevention and avoidance from loss adjudication.
Thirteen to 20 named storms are expected to hit this season, including six to 10 that will reach hurricane status. So far this year, there has been one named storm, Ana, which did not make landfall in the U.S.
Florida, Louisiana and New York have the most homes at risk of damage in the 2021 hurricane season.
Following Hurricane Laura's landfall last August, the already-high delinquency rate in
The lack of construction over the past 10 years compounds the impact of widespread home damage. For example, Houston's delinquency rate sat at 4.7 percentage points between August and October 2017 following
In Wilmington, N.C., housing inventory was down by 26% four months after the Sept. 2018 landfall of
After
Meanwhile, damage costs have been trending higher, CoreLogic noted.
"Based on data from NOAA National Centers for Environmental Information, over the past four decades we've seen a 70-90% increase every decade in total inflation-adjusted losses from weather events in the United States — and this trend isn't slowing down," the CoreLogic report said. "Many of the increases are driven by population migrations from expensive metropolitan areas to high-risk, more affordable coastal areas."
The metro area with the largest exposure is New York City, which suffered greatly following
Those dollar amounts may be reflective of the
For multifamily properties, New York City is by far the metro area with the largest exposure, with 448,051 properties subject to wind damage with an RCV of $213.8 billion and 108,607 properties at risk of a storm surge, with $52 billion in RCV.
Local building codes also impact the amount of damage done by a hurricane, a separate report from the Insurance Institute for Business & Home Safety said.
"Building science has advanced significantly over the last decade, providing cost effective strategies to reduce the impact of Mother Nature," said Anne Cope, chief engineer at IBHS, in a press release. "Modern building codes are core to addressing the known risks of high winds and heavy rain that invariably come with these systems."
The states IBHS said had the strongest building codes are Florida, Virginia, South Carolina, New Jersey and Connecticut. The states rated as poor were: Georgia, New York, Maine, New Hampshire, Texas, Alabama, Mississippi, and Delaware.
