Foreclosure Rate For Flooded Homes Rises 40%
According to First Street, the real estate research firm, foreclosure rates tend to soar in areas where floods have damaged residences. “Properties flooded in an extreme weather event face a 0.29-percentage-point higher foreclosure rate than nearby, unflooded homes—which historically translates to an average 40% surge in post-flood foreclosures among damaged homes across events analyzed.”
Research from other firms supports that data. Real estate prices have dropped, and people have been forced out of their homes due to high insurance rates. Potential buyers cannot get mortgages without insurance. It is a downward spiral. Some homes are simply unsellable.
Florida Issue
The residential price and insurance problem has caused people to migrate elsewhere, which is often to northern states where the weather is more temperate. In locations like Fort Myers, real estate prices are collapsing.
One thing about defaults is that they tend to spread. Neighborhoods with unsold houses are not the kind of neighborhoods people want to move to. The same problem happened during the financial crisis.
As hurricanes increase in frequency and intensity, the problem will become more significant.
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