As Tropical Storm Elsa [1] delivers torrential wind and rain to many of North America's coasts—from Florida, with remnants tracking along the eastern U.S. to Maine—many heavily populated metros will experience localized flooding, weather pundits report. By Friday they expect re-intensification and storm-force winds across much of the Northeast. And this is just the precursor to a hurricane season that the experts at CoreLogic say—in their 2021 Hurricane Report— [2]threaten some 8 million homes with more than $1.9 trillion in reconstruction cost value.
CoreLogic's Chief Economist Frank Nothaft recently discussed the ways Elsa and other expected tempests will impact properties, borrowers ability to keep up with housing payments, and local housing markets.
He points to some of the things he witnessed in 2020 as a baseline for what to expect in future days, weeks, and months.
"In 2020, in the span of six weeks, Hurricanes Laura and Delta made landfall 12 miles apart, together taking nearly 100 lives and decimating southwest Louisiana. A look back at the effects of these two hurricanes [3] on the Lake Charles metro shows the potential effects on properties," Nothaft said.
Taking into account the effects of the nationwide pandemic, Nothaft examines the delinquency rates among homeowners experiencing the "double whammy" of COVID-19 and a major storm as well as how those disasters impacted home prices.
Take Lake Charles, Louisiana, for example, which like many metros experienced a jump in delinquency rates at the start of the pandemic.
"When Hurricane Laura hit, the transition rate into delinquency spiked even higher in Lake Charles. While the effect on the current-to-delinquent transition was temporary, it had longer-term consequences for many homeowners," Nothaft explained. "The serious delinquency rate in Lake Charles was below that of the rest of Louisiana prior to the pandemic, rose along with the rate for Louisiana in the early months of the pandemic, but then moved even higher after Hurricanes Laura and Delta. By the end of 2020 the rate was more than three percentage points higher in Lake Charles than in the rest of Louisiana."
And consider, he says, the effects of the unforeseen recession and back-to-back hurricanes on home values in Lake Charles.
"Home prices had been rising close to the Louisiana average before the pandemic, then slowed during the first few months of the pandemic and turned negative after Hurricane Laura. While price growth has recovered in Lake Charles in early 2021, it was running below that of the rest of Louisiana and is only one-half of the national growth rate as of April."
The economist concludes that "natural disasters cause extensive property damage, personal injury, a reassessment of hazard risk, and disruptions in local housing markets. Mortgage delinquency rates spike and the price and availability of shelter are affected as well. These effects are likely to reoccur when the next tropical cyclone makes landfall in the U.S."
Access CoreLogic's full 2021 Hurricane Report [2], which provides insight into property risk, both nationally and by metro area via CoreLogic.com.
Authors of that report say "The only way forward is to understand what really is at risk and educate, prepare and collaborate with
everyone who has a stake in the ongoing crisis, including insurance companies, lenders, government agencies, and the families on the front line."
Also, listen to economist Frank Nothaft discuss the pending hurricane season at CoreLogic.com [4].
In this month's DS News print magazine, several industry experts share advice [5] on best disaster-planning practices for homeowners and for the servicing industry.