October 11, 2019
Long-Term Negative Effects of Natural Disasters on Homeownership
While the weather models used by some experts predicted hurricanes were less likely to hit the US in 2019 than in recent years due to what they thought would be a weaker El Nino (we’re looking at you, Colorado State University), we now know this to not be the case—at least where the Southeastern coast of the US is concerned. This is becoming an annual event. And alongside hurricanes like Dorian, which are proving to pose dire risks to homeowners, other climate-change related natural disasters, like earthquakes, tornados, wildfires, and storm-based flooding, also create a great deal of risk for homeowners. Naturally, the effects that these catastrophes have on homeownership are profound.
Those areas that are facing financial struggles prior to the hit of a disaster are already living a fragile situation—and the natural disaster acts as a straw (or perhaps an anvil) serving to break the camel’s back. Naturally, homeowners who have opted to go without the proper insurance on their homes are at extreme risk for default on their loans, and even foreclosure—especially if they are living paycheck to paycheck, which is a common occurrence these days. And by no means are these effects merely short-term.
Indeed, according to a recent report by the Urban Institute, the ill effects of a home’s being subject to natural disaster tend to radiate outward persistently, and even have the potential to grow as time goes by. In fact, according to the report, “While living in a community hit by a medium-sized natural disaster leads to a 5 percentage point increase in the share with debt in collections one year after the disaster, this negative effect doubles to 10 percentage points by year four.”
Interestingly, though, it isn’t always the large-scale disasters that cause the largest or longest-lasting effects. It’s medium-scaled disasters—which are much less likely to receive the long-term public recovery funding than their larger counterparts—that create the deepest cuts. In fact, credit-score declines by those hit by medium-sized disasters fall by an average 22 points, while those affected by public-aided large-scale disasters see only a 10 point average decline.
And such disasters can also create problems with title. When you’re looking for a home in Rhode Island, Massachusetts, or Florida, you can contact us to see how we can help you ensure a full and unproblematic transfer of title. Topouzis & Associates, P.C. does full title searches and checks, and solves problems we encounter. Moreover, we are backed by multiple underwriters, staffed by residential real estate specialists, and ready to help you avoid costly delays and streamline your residential transactions.