REAL ESTATE

Hurricane Ida’s damage to Southeast homes could total as much as $21B

The price tag for Hurricane Ida’s property damage in Louisiana could be in the tens of billions of dollars, but the good news is much of it is likely insurable, according to CoreLogic.

Initial estimates project residential properties in the area and surrounding states could reach between $9 billion and $13 billion for wind damage, plus an additional $5 billion to $8 billion from flooding. Of that total, insurance is estimated to cover between $5.5 billion and $8.5 billion for wind and $2.5 billion and $3.5 billion stemming from flooding.

Homes destroyed and submerged in water after Hurricane Ida near Chauvin, Louisiana, U.S., on Wednesday, Sept. 1, 2021. The electric utility that serves New Orleans has restored power to a small section of the city after Hurricane Ida devastated the region’s grid.

Mark Felix/Bloomberg

Commercial properties are likely to incur $9 billion to $13 billion in damage from flooding and $4 billion to $6 billion from wind. Around $3.5 billion to $5.5 billion of the flood damage and $2.5 billion to $3.5 billion of the wind damage is likely to be insured. The storm’s more recent impact on the New York/New Jersey area has not been assessed yet and was not included in the total.

Previously, the company had estimated that 941,392 homes with a $220 billion reconstruction cost value could be affected based on the storm’s forecast path.

CoreLogic did not release revised estimates for the number of homes affected or the RCV, but Tom Larsen, principal of insurance and spatial solutions, said during a virtual event Thursday that he considers the latest figures to be generally more optimistic than earlier ones.

“The reality was not as severe as projected,” he said. Still, how many homes will need to be reconstructed as a result of the storm remains to be seen.

After the more intense Hurricane Katrina devastated New Orleans, many damaged homes were not rebuilt in some of the hardest hit areas, noted Shelly Yerkes, a senior director in product management at CoreLogic, during the webinar. Other homes were rebuilt to stricter codes. So between the relative reduction in homes in the region, and the increased structural soundness, the number of houses that will need to be reconstructed this time around will likely be lower.

“There is just less exposure in the New Orleans area,” Yerkes said during the CoreLogic webinar.

However, New Orleans County is still facing the biggest risk of disruption to mortgage transactions from Hurricane Ida, ClosingCorp reported separately on Thursday. New Orleans has $245 million in transactions at risk, followed by Jefferson ($200 million) and Saint Tammany ($190 million), according to data from ClosingCorp clients, which represents roughly 40% of the industry. In total, ClosingCorp has estimated that more than 8,000 applications representing $1.7 billion to $1.8 billion in home loans could be disrupted by the storm.

Power outages and the potential need to re-appraise properties that may have been damaged are among the reasons that loans in process tend to get disrupted when hurricanes occur.


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