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36 | M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T Tropical Storm Elsa marks the beginning of a storm season expected to threaten some 8 million homes with more than $1.9 trillion in reconstruction cost value. A s Tropical Storm Elsa delivered tor- rential wind and rain to many of North America's coasts—from Florida, with remnants tracking along the eastern U.S. to Maine— many heavily populated metros experienced localized flooding, weather pundits report. This is just the precursor to a hurricane season that the experts at Core- Logic say—in their 2021 Hur- ricane Report—threaten some eight million homes with more than $1.9 trillion in reconstruc- tion cost value. CoreLogic's Chief Economist Frank Nothaft recently discussed the ways Elsa and other expected tempests will impact properties, borrowers' ability to keep up with housing payments, and local housing markets. He points to some of the things he witnessed in 2020 as a baseline for what to expect in future days, weeks, and months. "In 2020, in the span of six weeks, Hurricanes Laura and Delta made landfall 12 miles apart, together taking nearly 100 lives and decimating southwest Louisiana. A look back at the effects of these two hurricanes on the Lake Charles metro shows the potential effects on properties," Nothaft said. Taking into account the effects of the nationwide pandemic, Nothaft examines the delinquency rates among homeowners expe- riencing the "double whammy" of COVID-19 and a major storm as well as how those disasters impacted home prices. Take Lake Charles, Louisiana, for example, which like many metros experienced a jump in delinquency rates at the start of the pandemic. "When Hurricane Laura hit, the transition rate into delinquen- cy spiked even higher in Lake Charles. While the effect on the current-to-delinquent transition was temporary, it had longer-term consequences for many home- owners," Nothaft explained. "The serious delinquency rate in Lake Charles was below that of the rest of Louisiana prior to the pan- demic, rose along with the rate for Louisiana in the early months of the pandemic, but then moved even higher after Hurricanes Laura and Delta. By the end of 2020, the rate was more than three percentage points higher in Lake Charles than in the rest of Louisiana." And consider, he says, the ef- fects of the unforeseen recession and back-to-back hurricanes on home values in Lake Charles. "Home prices had been rising close to the Louisiana average before the pandemic, then slowed during the first few months of the pandemic, and turned negative after Hurricane Laura. While price growth has recovered in Lake Charles in early 2021, it was running below that of the rest of Louisiana and is only one-half of the national growth rate as of April." The economist concludes that "natural disasters cause extensive property damage, personal injury, a reassessment of hazard risk, and disruptions in local housing mar- kets. Mortgage delinquency rates spike and the price and availabil- ity of shelter are affected as well. These effects are likely to reoccur when the next tropical cyclone makes landfall in the U.S." THE LATEST SERVICING How Hurricanes Affect Local Housing Markets