HOUSTON—This hurricane season begins as the economy struggles. This year, preparation, evacuation and response to hurricane season will look far different than the average year, according to the 2020 CoreLogic Storm Surge report.
With the Atlantic hurricane season officially underway, many states are still under stay-at-home orders or strict social distancing guidelines–causing economic stress on housing and forcing communities to develop new logistical measures to recover from natural catastrophes. The analysis outlines operational ramifications, the economic recovery challenges exacerbated by the virus and ways to get ahead of what is potentially to come.
With an unemployment rate that has exceeded 14% in April 2020, cities at high risk of storm surge damage also face risk of mortgage delinquencies. Miami (5.1%), New York (4.7%) and New Orleans (6%) had elevated mortgage delinquency rates in February, well above the US rate (3.6%) and two months ahead of the spike in US unemployment.
And, nearly 7.4 million single- and multifamily homes with more than $1.8 trillion in combined reconstruction cost value are at risk of storm surge and possible mandatory evacuation in the midst of the global pandemic.
"If a hurricane causes significant storm surge damage during a time when mortgage delinquencies are already high, this could result in additional losses for homeowners, lenders and insurers–and ultimately, delay economic recovery for impacted communities," said Frank Nothaft, chief economist at CoreLogic. "For example, our analysis shows that three months after 2018's Hurricane Florence made landfall, serious delinquency rates had doubled in major metros affected by the storm."
In fact, Miami, New York and New Orleans are near the top of the list for storm surge risk to single-family homes, ranking first, second and fourth, respectively. And, Florida, Louisiana, New York and Texas single-family homes are also at great risk for storm surge.
"States at high risk of storm surge damage also face greater risk of mortgage delinquencies, at a time when the unemployment rate exceeds 14% thus far in 2020," Thomas Jeffery, principal of science and analytics at CoreLogic, tells GlobeSt.com. "In the midst of social distancing, the report addresses additional complexities to how communities prepare, evacuate and respond to major storms."
The Storm Surge report provides an evaluation of the number of homes in the United States that are vulnerable to storm surge, particularly the properties that line the coastlines from Texas up to Maine. The analysis identifies single-family/SFR and multifamily residences/MFR at risk of storm surge during the 2020 Atlantic hurricane season including the total estimated reconstruction cost value/RCV, which is calculated using the combined cost of construction materials as well as equipment and labor, assuming total destruction of the property.
In 2020, there are 7,110,779 SFRs and 252,657 MFRs at risk of storm surge to date. The RCV for SFRs tops $1.7 trillion, while MFRs tops $95 billion, says CoreLogic.
"Storm surge has historically been the deadliest and most destructive hazard we deal with," said Jeffery. "Now, with hurricane preparedness and response logistics potentially compounded by the pandemic, it has never been more important to pay attention to storm warnings and prepare for the possibility of hurricanes making landfall this year along the Gulf and Atlantic coasts."
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
