Natural disasters may hurt roughly 15% of construction projects: Built
National lenders who fund the building of new homes are currently dealing with natural disasters that may affect about one out of seven projects, according to Built Technologies, a fintech provider.
The company recently began tracking projects in Federal Emergency Management Agency-declared disaster areas going back three months after clients voiced concern that this risk was growing, said Chris Boyd, vice president of product at Built.
"With all the natural disasters across the country right now, we were looking at what we could do to help construction lenders," he said, adding that the clients weren't always immediately able to identify which of their projects were impacted.
The company found that roughly 15% or 7,316 out of around 48,000 of its clients' projects were in disaster areas after mapping federally declared disaster areas to the projects it helps lenders manage.
Built primarily manages builder or consumer loans for new construction of single-family homes. It also helps lenders manage a smaller number of commercial or multifamily construction projects. The company is used by more than 100 construction lenders and thousands of owners and contractors to manage loans representing over $40 billion of construction project value to date.
The company found that for its client base, the top five states with the highest number of affected projects were as follows: North Carolina (3,544), Texas (1,725), Florida (1,302), Louisiana (555) and Connecticut (234). These areas were impacted by storms such as Hurricanes Laura and Isaias. California, which recently was beset by wildfires, ranked sixth with 153 projects potentially affected.
Not all projects in the disaster areas necessarily experienced adversity but the risk that they did is high, Boyd noted.
In addition to tracking the impact of natural disasters, the company also recently helped lenders track the effect of local construction restrictions put in place to counteract the impact of the coronavirus. More than 4,000 projects across Washington, Massachusetts, New Jersey, Louisiana, Kansas and California were affected at one point by government-imposed construction halts due to the coronavirus, according to an assessment of the loans in Built's system. But by early June, the number of construction halts on projects had been halved and was continuing to dwindle rapidly in response to states opening up and lifting restrictions.
Damage from natural disasters may have longer-term implications for construction projects.