The Atlantic hurricane season begins in June and ends in November. In recent years, the number of storms has increased, resulting in property damage and personal injuries. This year, experts are predicting an above-average number of storms. Looking back at last year’s Hurricane Ida can better understand how these types of storms can affect local markets.
In October last year, a Category 4 hurricane, Hurricane Ida, hit Louisiana, causing over a hundred deaths and costing around $75 billion in damage. Most of the damage was reported in Lafourche Parish, which is located in the Houma metro area. Many of the houses and businesses that were damaged by the storm were destroyed.
The effects of the hurricane on the housing market led to a spike in the number of people who were experiencing financial hardship. In the month following the storm, the transition rate from current-to-30-day delinquencies in the Houma metro area increased to over 7%.
Many homeowners in the Houma metro area experienced ongoing financial hardship. In November, the number of borrowers who were at least three months late on their payments increased by 50%. Even though the national serious delinquency rate had dropped 16% during that period, the rate in Houma remained higher than Louisiana’s. Six months following the hurricane, the serious delinquency rate in the area was double what it had been before the pandemic.
The decline in oil prices during the pandemic was one of the factors that affected the housing market. However, the effects of Hurricane Ida also caused home prices to slow down and rents to decrease. Despite the slow recovery, home prices were still up less than inflation and less than half the national increase recorded by the CoreLogic Home Price Index.
Despite the slow recovery, home prices were still up less than inflation and less than half the national increase recorded by the CoreLogic Home Price Index. Single-family rents also decreased.
Natural disasters can cause extensive property damage and personal injury, disrupt the local housing market, and raise concerns about the hazard risk in the area. These effects are likely to re-emerge once another tropical cyclone hits the US. Delinquencies and the availability of shelter can also increase once a hurricane hits the country.