More than 6.8 million homes on the Atlantic and Gulf coasts are at risk of damage from hurricane storm surges, with a total reconstruction cost value of more than $1.5 trillion, according to CoreLogic’s 2016 Storm Surge Report.
The number of homes in the most extreme category of risk, however, decreased this year, due to an improvement in the way CoreLogic is now able to measure elevations of homes.
The report comes as the Atlantic hurricane season began Wednesday, and the risk of destruction is rising. Both the number of homes and the cost to rebuild them are hitting new highs, as homebuilders and buyers seem unfazed by warnings of global warming, rising sea levels and more furious storms heading to shore.
“We have a period of several years of nonevents, and then those investments start to look pretty lucrative again,” said Tom Jeffery, senior hazard risk scientist for CoreLogic. “We’re banking on something not happening, when in fact we really don’t know when the next big one is going to come ashore.”
Florida tops the list with 2.7 million homes at risk. Texas ranks third with just over 531,000. Louisiana and New Jersey have less coastal exposure, but their lower-lying elevations extend farther inland, ranking them second and fourth respectively in risk. The water in these two states can travel farther inland.
The danger isn’t slowing demand for coastal housing.
Diane Turton, who has been selling real estate on the New Jersey shore for 50 years, said the market is hot. She said her closed sales in the first quarter were 55 percent higher than last year, thanks to increased demand, near record low mortgage rates, and sky-high prices in the Hamptons that are pushing some buyers south.
She said she had 13 offers on one of her listings last month. “People are choosing not to go in the stock market. They’re buying real estate,” she said.
Even with Superstorm Sandy, which devastated much of her 80-mile coastal sales region, still relatively recent, Turton said buyers are far from leery of the location. They are also willing to pay the higher taxes that accompany the risk.
“They’re asking, but they’re getting answers. As long as the town answers the questions, they’re not that apprehensive. They want to be at the shore,” she said.
While the Atlantic coastline is long, just 15 local real estate markets account for two-thirds of the 6.8 million at-risk homes and 68 percent of the total reconstruction costs. Miami has the most homes at risk, but New York City has a much higher reconstruction value of $260 billion, due to its dense population within the storm-surge risk area.
Hurricane prediction models show this season may be more active than the 30-year average, but the threat does not seem to be deterring homebuyers. That is especially true because last summer had a relatively inactive hurricane season. CoreLogic’s Jeffery uses the term “hurricane amnesia.”
“You forget that these things happen, if it doesn’t happen every year. Even when Sandy occurred it wasn’t in Florida or Louisiana. If it doesn’t happen on a frequent basis, we tend to ignore it,” he said.
Bottom line, if you want an ocean view, you have to live by the ocean. If you want a view of the forest, you have to live by the forest. That means taking on the risk of floods and fires — risks an awful lot of homeowners are willing to take.