Hurricane season and coronavirus could compound mortgage distress
In addition to the potential wave of mortgage defaults resulting from coronavirus-driven forbearances, hurricane season could put nearly 7.4 million homes worth $1.8 trillion at risk, according to CoreLogic.
With overall weakened mortgage health and staggering unemployment, any storm surges could drive more borrowers to default or foreclosure. In January, CoreLogic released a report showing large-scale natural disasters each causing over $1 billion in damage occurred at double the frequency over the last decade than the average dating back to 1980.
"If a hurricane causes significant storm surge damage during a time when mortgage delinquencies are already high, this could result in additional losses for homeowners, lenders and insurers — and ultimately, delay economic recovery for impacted communities," Frank Nothaft, chief economist at CoreLogic, said in a press release. "For example, our analysis shows that three months after 2018's Hurricane Florence made landfall, serious delinquency rates had doubled in major metros affected by the storm."
The places most at-risk also had some of the nation's highest delinquency rates. The most single-family homes facing storm surge damage are located in Miami. The Florida hotspot has 798,601 houses worth $157.47 billion in reconstruction cost value. New York City followed with 732,531 at-risk homes, but led all metros with an estimated $285.64 billion of RCV. Tampa, Fla., and New Orleans are the other markets with over 400,000 single-family residences in potential peril, with RCVs of $83.42 billion and $101.47 billion, respectively.
Similarly, New York and Miami led in multifamily properties in storm surge danger. New York has 102,076 multifamily residences worth $48.73 billion and Miami has 35,914 valued at $9 billion. Boston followed with 24,474 multifamily properties at-risk with an estimated $8.97 billion in reconstruction value.
The valuations assume the costs of materials, equipment and labor in the case of total property destruction.
"Storm surge has historically been the deadliest and most destructive hazard we deal with," said Thomas Jeffery, principal of science and analytics at CoreLogic. "Now, with hurricane preparedness and response logistics potentially compounded by the pandemic, it has never been more important to pay attention to storm warnings and prepare for the possibility of hurricanes making landfall this year along the Gulf and Atlantic coasts."