Over 800,000 Homes at Risk With Hurricane Idalia: CoreLogic Estimate

Oyster farmer Tyler Hofe's view of Tropical Storm Idalia from his home in Avon Village, N.C. on Hatteras Island on the Outer Banks on Aug. 31, 2023. Courtesy of Tyler Hofe

The destruction caused by Hurricane Idalia could affect over 800,000 dwellings along the Florida Gulf Coast.

CoreLogic, the property analytics data service, released an estimate on Aug. 29 that the reconstruction could cost hundreds of billions of dollars.

The property analytics firm used data from the federal government’s National Hurricane Center, which projected that the hurricane would make landfall as a Category 3 storm.

As Idalia hit Florida’s Big Bend region on Aug. 30, winds up to 150 miles per hour caused storm surges that pushed waves of water, as high as 11 feet onshore.

The storm hit between Tallahassee and Tampa and is now impacting Georgia and the Carolinas.

Sunshine State Facing Multi-Billion Dollar Catastrophe

Corelogic said that 808,321 single-family and multifamily homes could face damages with a reconstruction cost value (RCV) of up to $238.4 billion.

RCV measures represent the expenses for a total loss including materials, equipment, and labor but not the value of the land or lot.

“Due to the sparsely populated forecasted impact area, there will likely be a lower insured loss ceiling from Idalia, compared to last year’s Hurricane Ian,"  said Jon Schneyer, director of Catastrophe Response, CoreLogic.

“Even so, systems that make landfall along the Gulf Coast are likely to generate a more substantial storm surge than equivalent storms that hit the Atlantic Coast,” he said.

“As such, Hurricane Idalia is expected to bring hurricane-force winds, catastrophic storm surge of up to 15 feet, and widespread inland flooding across Florida and the southeastern U.S.,” he added.

The storm may cause even more financial stress for homeowners than even Hurricane Ian did in 2022 and may even lead to a wave of insolvencies and foreclosures, say analysts.

The Sunshine State has one of the nation’s hottest housing markets, but the once relatively affordable home prices have become increasingly out of reach since the pandemic.

Insurance Companies Are Dropping Coverage in Florida

Florida’s housing market is also facing significant issues with homeowner insurers, who said they were partially pulling coverage for certain homeowners in the state.

Farmers Insurance is discontinuing automobile, home, and umbrella policies for Florida residents, while AAA is sunsetting policies for a “very small” percentage of high-risk policies, reported National Mortgage News in July.

Insurers have blamed exposure to storm exposure and increased construction costs alongside inflation for their withdrawal from the Sunshine State.

“Insurance companies over time have been leaving the Florida insurance market. This has created a lack of liquidity and a loss of choices and competition. The devastating hurricane last year in Fort Myers was more salt in the wound. The numbers don’t lie,” Phil Nicozisis a real state developer and property owner told The Epoch Times.

“Since Governor [Ron] DeSantis took office average annual insurance premiums for homeowners insurance has tripled,” he said.

“Unfortunately, it’s going to take some time for the memory of the storms to be in the rearview mirror before the Florida insurance market has new players providing more liquidity,” said Mr. Nicozisis.

Florida has the highest average property premiums in the nation, which have also been exacerbated by rampant litigation issues, like fraudulent insurance scams and favorable attorney fees, which have led to a wave of lawsuits against insurers covering the state.

Over 250,000 lawsuits were filed in March against the state’s homeowners insurers, with seven insurance companies going insolvent over the past year.

Lenders said this would deepen unaffordability for many residents and buyers in Florida, whose cities have some of the nation’s fastest-growing home prices, on top of some of the most expensive insurance rates.

Homeowners Insurance Becomes a Major Political Issue

The governor has signed three bills since 2022, aimed at easing the insurance sector crisis, but AAA said the changes would take some time to fully materialize.

Attorney Generals from ten states including Florida, sued FEMA and DHS in June, over unfairly hiking National Flood Insurance Program premiums, which homeowners are required by law to purchase for protection.

The pending lawsuit was filed by Louisiana Attorney General Jeff Landry in the U.S. District Court for the Eastern District of Louisiana.

Lenders are concerned that the hikes will severely impact homeownership in those regions, by raising premiums by up as much as 700 percent.

However, damage by Hurricane Idalia is likely to cost insurers less compared to Ian, because of the sparsely populated impact zone, according to Jon Schneyer, director of Catastrophic Response at CoreLogic, in a press release.

“Even so, systems that make landfall along the Gulf Coast are likely to generate a more substantial storm surge than equivalent storms that hit the Atlantic Coast,” he said.