Mortgage

Is the housing market ready for another rough hurricane season?

CoreLogic estimates damage could total $1.6 trillion in 2018

The U.S. is still reeling from last year’s hurricanes and yet the season is beginning once again, this time threatening to create even higher reconstruction costs.

Last year, two major hurricanes came within a week of each other as Hurricane Irma wreaked havoc on parts of Florida and Hurricane Harvey brought unprecedented flooding to South Texas. Not long after that, Hurricane Maria destroyed Puerto Rico.

In fact, the small island is still recovering from that storm, and new information continues to emerge. While the official death toll from the storm is listed at 64, a Harvard study released earlier this week estimated the death toll from storm-related deaths could be as high as 5,000.

And while President Donald Trump is defending FEMA’s response to the storm, volunteer nurses who visited the island days after the storm described a scene where residents were “left to die,” by a federal response that “failed its own American citizens.”

And all of the destruction leads us to wonder: are we ready for the next round?

The official start to hurricane season is Friday, but already subtropical storm Alberto swept its way from Florida to Chicago, destroying a home and killing two people and leaving one missing.

Now, more than 6.9 million homes along the Atlantic and Gulf Coast are at potential risk of damage from hurricane storm surge in 2018, according to the Storm Surge Report released today by CoreLogic, a global property information, analytics and data-enabled solutions provider.

CoreLogic reported this would bring a reconstruction cost value of more than $1.6 trillion. This is up 6.6% from 2017 due to higher regional construction, equipment and labor costs.

The analysis examines risk from hurricane-driven storm surge for homes along the coastlines of 19 states and for metro areas. Homes are categorized by five risk levels: Low, homes affected only by a Category 5 storm, moderate, homes affected by Category 4 and 5 storms, high, homes affected by Category 3, 4 and 5 storms, very high, homes affected by Category 2, 3, 4 and 5 storms and extreme, homes affected by Category 1 through 5 storms.

RCV figures represent the cost to completely rebuild a property in case of damage, including labor and materials by geographic location, assuming the worst-case scenario at 100% destruction.

“While industry predictions for this year’s storm season indicate average activity levels, associated storm surge risk remains an important consideration for residential and commercial properties in the 19 states analyzed,” CoreLogic Senior Hazard Scientist Tom Jeffery said. “Depending on the location of a storm’s landfall and that area’s population density and reconstruction costs, lower category storms can cause just as much damage as storms in higher categories.”

At the Mortgage Bankers Association Secondary conference in New York City last week, a panel of government lenders discussed the upcoming hurricane season, and what they can do to be better prepared this time around.

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