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Home · Property Management · Latest News : As hurricane season starts, potential for coastal property damage tops $1.6 trillion

New reports this week put the potential for costly damage from the 2018 hurricane season into stark perspective, and underscore the continued risk of building or rebuilding homes in areas threatened by storm damage.

According to new analysis by CoreLogic, more than 6.9 million homes in the United States are at risk of hurricane storm surge damage, which represents $1.6 trillion in potential reconstruction costs. That potential price tag increased 6.6 percent year-over-year due to higher regional construction costs, equipment, and labor costs.

At the same time, per new data on coastal flooding, rising sea levels and changing weather patterns will make flooding even more common. According to the 2017 State of High Tide Flooding and a 2018 Outlook by the National Oceanic and Atmospheric Administration, last year saw a record-breaking level of high tide flooding. Due to sea level rise, the national average frequency of high-tide flooding is double what it was 30 years ago, exacerbating the potential for damage from hurricanes and tropical storms.

The increasing value of property at risk from storm damage puts increasing strain on flood insurance and the National Flood Insurance Program, which will expire in the middle of this year’s hurricane season if there’s no congressional action.

In 2016, the chief economist for Freddie Mac, a government enterprise that supports the mortgage market, wrote that increased coastal flooding and storm surges will eventually get so bad that homeowners, unable to sell waterlogged property, will ditch their homes and mortgages, triggering a housing crisis. Already, some coastal real estate professionals see beachfront real estate becoming harder to sell, due in part to perceived risk.

Risk varies by region. The Atlantic coast contains 3.9 million at-risk homes with a reconstructed home value (RCV) of roughly $1 trillion, a $30 billion increase from last year. On the Gulf Coast, the 3 million at-risk homes have an estimated RCV of $609 billion, a $16 billion increase from 2017.

The placement and power of a storm play a great role in determining its eventual impact. Even a low-intensity storm hitting Miami—with 788,000 at-risk homes and an RCV of more than $156 billion, the city with the most potential for costly reconstruction—would do more damage than a high-intensity storm making landfall along a sparsely inhabited coastline.

Last year, the United States suffered the most billion-dollar natural disasters in its history, as a warming climate creates record-breaking numbers of extreme weather events. The two largest storms, Harvey and Irma, are estimated to have cost between $40 billion-$59 billion and $29 billion-$46 billion respectively, according to Realtor.com.

These estimates represent worst-case scenarios from particularly devastating Category 5 hurricanes (the NOAA predicts average hurricane activity this season). The tables below differentiate risk based on location and storm intensity.

Homes with Hurricane Storm Surge Risk by State

State Extreme Very High High Moderate Low*
Florida 351,093 1,064,674 1,752,603 2,292,791 2,774,175
Louisiana 72,256 207,442 624,521 747,111 817,480
Texas 39,109 117,558 253,947 384,944 543,847
New Jersey 95,659 278,539 382,065 471,353 N/A
New York 75,238 224,558 347,236 462,380 N/A
Virginia 26,960 94,378 246,824 366,478 409,129
South Carolina 35,934 126,997 209,026 294,239 347,030
North Carolina 32,282 95,286 160,831 210,233 259,718
Massachusetts 11,048 46,558 102,189 157,898 N/A
Georgia 8,887 50,409 105,735 141,518 152,559

The low risk category refers to Category 5 hurricanes, which are not common along the northeastern Atlantic Coast. States in that region are designated as N/A for this category due to the extremely low probability of a Category 5 storm affecting these areas. CoreLogic

Reconstruction Cost Value of At Risk Homes by State

State Extreme Very High High Moderate Low*
Florida $68,993,319,371 $214,615,495,959 $353,434,047,211 $458,546,265,943 $552,417,823,248
New York $29,069,437,198 $92,192,934,548 $142,653,686,948 $190,523,945,573 N/A
Louisiana $15,058,006,592 $44,361,573,373 $141,431,122,080 $169,398,148,734 $186,089,070,917
New Jersey $27,210,934,630 $83,140,546,592 $116,378,523,825 $146,074,429,226 N/A
Texas $6,544,802,706 $20,281,149,088 $46,590,193,249 $73,689,714,628 $103,257,560,067
Virginia $6,889,209,422 $23,532,519,915 $57,147,551,590 $84,231,366,445 $95,057,016,309
South Carolina $10,365,743,962 $33,689,536,077 $52,352,428,765 $70,363,340,488 $80,775,388,252
North Carolina $6,502,998,590 $19,557,292,731 $33,348,232,464 $43,887,698,767 $54,356,018,315
Massachusetts $2,980,187,240 $13,363,727,998 $29,309,257,327 $46,442,774,460 N/A
Georgia $2,740,063,841 $13,213,068,236 $24,703,010,004 $31,744,968,374 $33,763,709,156

The low risk category refers to Category 5 hurricanes, which are not common along the northeastern Atlantic Coast. States in that region are designated as N/A for this category due to the extremely low probability of a Category 5 storm affecting these areas. CoreLogic

Source: curbed.com

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