Assessing the Risk: 32 Million U.S. Homes at Hurricane Threat in 2023
As we officially step into the hurricane season, homeowners and investors alike find themselves faced with potential risks and costs that such natural disasters can bring. According to CoreLogic’s latest report, 2023 is shaping up to pose a significant threat to U.S. real estate, with over 32 million homes at moderate or greater risk of hurricane damage.
Recent Trends and Forecasts
The National Oceanic and Atmospheric Administration (NOAA) suggests a “near-normal” hurricane season for both the Pacific and Atlantic coasts. However, a glance at the data from the last three years reveals that ‘normal’ can still imply substantial damage. In fact, 13 hurricanes have made landfall in the U.S. within this timeframe, with Hurricane Ida, the second-most damaging storm the country has seen, accounting for an estimated $36 billion in insured losses.
The increasing intensity and frequency of these storms have resulted in rising property insurance premiums across the nation. The question on everyone’s mind is: Will 2023 bring more of these costly risks?
CoreLogic’s Sobering Statistics
CoreLogic’s recent report sheds light on the situation with some startling numbers. The analysis indicates that over 32 million single-family residences are at a “moderate or greater” risk of damage from hurricane-force winds. This risk equates to potential reconstruction costs of a staggering $11.6 trillion.
Moreover, almost 8 million single-family properties could be at risk from storm surge flooding, with potential costs reaching up to $2.6 trillion. For multifamily residences, the figures are equally troubling: nearly 1 million properties are at risk for wind damage and 261,000 for storm surge flooding.
Geographic Vulnerabilities
The risks associated with hurricanes vary significantly depending on location. CoreLogic highlights that the New York City-Newark-Jersey City metro area is the most at-risk region. Approximately 8 million single-family residences here could suffer wind damage, while nearly 800,000 are susceptible to storm surge flooding.
Although hurricanes are more likely to make landfall in South Florida or along the Gulf Coast, the high number of exposed homes in the New York metro area, owing to its coastal proximity and population density, amplifies the region’s vulnerability. The potential damage could be catastrophic if a major hurricane were to make landfall, akin to Superstorm Sandy in 2012, which resulted in over $35 billion in insured losses.
The five most at-risk metros for single-family hurricane wind damage include:
- New York-Newark-Jersey City: 3,825,243 homes
- Houston-The Woodlands-Sugar Land: 2,085,879 homes
- Miami-Fort Lauderdale-Pompano Beach: 2,018,040 homes
- Philadelphia-Camden-Wilmington: 1,927,600 homes
- Washington, D.C.-Arlington-Alexandria: 1,766,435 homes
And for single-family storm surge flooding, the most at-risk metros are:
- New York-Newark-Jersey City: 788,261 homes
- Miami-Fort Lauderdale-Pompano Beach: 746,602 homes
- Tampa-St. Petersburg-Clearwater: 540,411 homes
- New Orleans-Metairie: 405,975 homes
- Virginia Beach-Norfolk-Newport News: 399,326 homes
Implications for Property Owners
The risk of property damage in these higher-risk regions could potentially lead to insurance providers retreating from these areas. This withdrawal could make renewing insurance policies a challenge for homeowners and investors. Particularly in Florida, insurance availability is becoming increasingly complicated as several companies are in liquidation.
Premiums for those who can find or renew insurance in these high-risk zones are also expected to rise significantly. In fact, property owners in Florida could see their premiums increase by 40% or more this year.
Looking Ahead
While the looming threat of hurricanes and the associated costs can be daunting, property owners and investors must stay informed and prepared. By understanding the risks, they can make informed decisions about insurance coverage and property protection measures, navigating the tumultuous waters of the 2023 hurricane season.