Study: Loan Delinquency Rates Triple Following a Disaster

January 30, 2020

After a natural disaster strikes, residents likely will feel after-effects in the housing market that could ripple through the communities for months or years to come. And the impact of natural hazards in 2019—including wildfires, hurricanes, tornadoes, and earthquakes—will likely bring an increase in mortgage delinquency rates, taking 12 or more months before normalizing to pre-disaster rates, according to a new study released by CoreLogic, a real estate data firm.

History has shown this to be the case, researchers say. Following hurricanes Harvey, Irma, and Maria in 2017, serious delinquency rates on home mortgages tripled in Houston and Cape Coral, Fla. Rates quadrupled in San Juan, P.R., after Hurricane Maria. After the 2017 Tubbs Fire and 2018 Camp Fire in California, serious delinquency rates rose more than 50% in Santa Rosa and Chico, Calif.

“While 2019 was not the most catastrophic year to date, it demonstrated a continuing trend of higher losses,” says Tom Larsen, principal of industry solutions at CoreLogic. “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. Understanding the past is critical to contending with the risk of the future.”

Ten or more weather and climate disasters exceeded $1 billion in 2019, according to CoreLogic’s Natural Hazard Report.

The following is an overview of some of the natural disasters that brought some of the highest losses and devastation to communities in 2019.

Tornadoes

  • A 2019 Dayton, Ohio, tornado prompted 30,000 insurance claims that totaled up to $480 million in insured losses. It was the third costliest weather event on record in Ohio.
  • A tornado in Dallas caused damage to nearly 10,000 structures and caused more than 150,000 customers to lose power. An estimated $2 billion in insured losses occurred, although insurers said that number is likely much higher.

Hurricanes

  • Hurricane Dorian on the Bahamas in 2019 prompted an estimated $3.4 billion in damages. This hurricane combined with the $750 million from the prior hurricane season means that in the past five years a total of $4.25 billion in losses have been felt in the Bahamas from hurricanes, according to CoreLogic.

Wildfires

  • More than 4.6 million acres were burned by wildfires in 2019. While the number is down from 8.5 million the previous two years, wildfires pose a costly disaster to many areas, particularly in the West.

Flooding

  • Hurricane Barry hit Louisiana in 2019 and caused about 74,000 homes to be at risk of flooding.
Source: 
Natural Hazard Report,” CoreLogic (Jan. 29, 2020)