Expectations of a more active hurricane season, driven by climate change, contributed to a year-over-year increase in CoreLogic’s reconstruction cost value estimate, its 2022 forecast said.
Nearly 7.8 million homes with more than $2.3 trillion in estimated combined reconstruction cost value are at risk of hurricane-related damages during the current Atlantic hurricane season, which runs from June 1 to Nov. 30. For 2021, CoreLogic had forecasted almost 8 million homes at risk, with as much as $1.9 trillion of RCV.
RCV is calculated on the cost to completely rebuild the existing structure, including materials, equipment and labor, but not the value of the land or a lot. It takes into account the highly unlikely worst case scenario that all affected properties will be totally destroyed.
Separately, CoreLogic estimates nearly 33 million homes with nearly $10.5 trillion in combined RCV are at risk of hurricane-force wind damages. Last year, wind damage was expected to impact 31 million homes with $8.5 trillion of RCV.
In fact, 2021 ended with 21 named storms, the third most active on record, with actual damages of $80 billion, the third costliest ever. That includes Hurricane Ida, with damage estimates of over $20 billion on the Gulf Coast and a further $16 billion to $24 billion in the Northeast.
It’s not just physical damage from the storm; Hurricane Ida led to increased mortgage delinquencies in affected areas like Houma, Louisiana.
The National Oceanic and Atmospheric Administration predicts a 65% chance of an above-normal hurricane season, with a 25% chance of a near-normal season and a 10% chance of a below-normal season.
A range of 14 to 21 named storms (with winds of 39 miles per hour or higher) are expected, of which six to 10 could become hurricanes (winds of 74 mph or higher); between three and six could be major hurricanes, those graded at category 3, 4 or 5, with winds of 111 mph or higher.
A persistent La Niña pattern — in which westerly winds high in the atmosphere weaken, resulting in an expanded area of low vertical wind shear — is likely to allow more Atlantic hurricanes to develop. This is combined with warmer-than-average sea surface temperatures in the Atlantic Ocean and Caribbean Sea, weaker tropical Atlantic trade winds and an enhanced west African monsoon that supports stronger African Easterly Waves, which seed many of the strongest and longest lived hurricanes during most seasons, NOAA said.
Add to that a stronger than average loop current in the Gulf of Mexico, Daniel Betten, chief meteorologist at CoreLogic, said in a press release. “Although La Niña events typically occur once every three years, this fall will likely be the fifth La Niña event over the last seven years.”
The New York metro area has the greatest risk for 2022, as nearly 900,000 single- and multifamily homes have nearly $433 billion in RCV at risk of storm surge damage and more than 4 million total properties with more than $2.2 trillion in RCV for potential risk of wind damage. For single-family properties only in New York, 789,279 homes are at risk for storm surge damage at nearly $370 billion of RCV. For wind, 3.8 million single-family homes are at risk for damage during the 2022 season at $1.9 trillion in RCV. This October will mark the 10th anniversary of Hurricane Sandy, which resulted in massive property damages in the area.
Miami’s metro area faces the next-highest amount of risk, with nearly 770,000 single- and multifamily homes having close to $193 billion in RCV at risk of storm surge damage and more than 2 million homes with more than $521 billion in RCV at risk of wind damage.
Florida has over 3 million homes at risk of storm surge damage, followed by Louisiana with nearly 911,000 and New York at over 600,000.
Texas tops the list for hurricane wind risk with more than 8.8 million homes at risk.