Analysts at property information and analytics provider CoreLogic believe that 2019 could bring an increase in mortgage delinquency rates in areas hit by consecutive years of destructive natural disasters.
The firm noted that after 2017 Hurricanes Harvey, Irma and Maria, serious delinquency rates on home mortgages tripled in the Houston, Texas, and Cape Coral, Florida, metropolitan areas and quadrupled in San Juan, Puerto Rico
Serious delinquency rates similarly spiked by more than 50% in the Santa Rosa and Chico, California metro areas after the 2017 Tubbs Fire and 2018 Camp Fire.
“While 2019 was not the most catastrophic year to-date, it demonstrated a continuing trend of higher losses,” said Tom Larsen, Principal, Industry Solutions.
“Affected communities experience an ensuing ripple effect from natural disasters, which is why continuously improving the data and analytics surrounding these catastrophes is so important in making our society more resilient,” he explained. “Understanding the past is critical to contending with the risk of the future.”
2019 marks the seventh year in the last decade in which 10 or more weather and climate disasters exceeding $1 billion have occurred.
The decade also brought some federal and state policy changes as the US grappled with more frequent and more severe natural disasters, including reforms to the NFIP, and significant changes to federal natural disaster mitigation and recovery policy.
Leading into the 2020s, FEMA’s approach to mapping and assessing flood risk may change with the advent of the NFIP’s Risk Rating 2.0 program expected in 2021, which aims to incorporate a structure-specific flood risk assessment into insurance rates
CoreLogic highlighted several major events in 2019 that it expects to have an impact on mortgages, including tornados in Dayton, Ohio and Dallas, Texas, which caused insured losses of up to $480 million and $2 billion, respectively.
Hurricane Dorian also cost the Bahamas $3.4 billion, which, in conjunction with the $750 million from prior hurricane seasons, means that losses represented more than one-third of the region’s $12 billion GDP over the last five years.
The US also experienced another year of heightened wildfire activity, as well as major flooding stemming from Hurricane Barry in Louisiana.
And in Japan, there could be severe repercussions following Typhoon Hagibis, particularly in terms of the flood element, of which 30% is estimated to be uninsured and will therefore fall to property owners.
