There are almost 7 million coastal homes facing more than $1.6 trillion in potential storm-surge reconstruction expenses this year, representing a 6.6% cost increase from last year’s hurricane season.
The increased estimate for potential expenses stems from high regional expenditures for construction equipment and labor in states like Florida, Louisiana and Texas, according to the 2018 CoreLogic Storm Surge report. These three states were hit hard by damage from storms like Hurricane Harvey and Hurricane Irma last year, and that has affected mortgage performance.
Servicers are concerned about hurricanes’ effect on homes because they are responsible for ensuring collateral is repaired in the wake of storms, and flood-damage is particularly nettlesome because it requires specialized insurance coverage.
Regionally, the Atlantic Coast has almost 4 million homes at risk with a possible reconstruction value of more than $1 trillion and the Gulf Coast has more than 3 million homes at risk with a potential reconstruction value of more than $600 billion. Atlantic Coast states with high levels of possible reconstruction expenses include New York and New Jersey.
“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,” said Dr. Tom Jeffery, senior hazard scientist at CoreLogic.
There is a 70% chance there will be 10 to 16 named storms that threaten life and property in 2018, according to the National Oceanic and Atmospheric Administration. This represents severity in a range between normal and near-normal for a hurricane season.