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Surge could do serious damage here
Jul 15, 2014



• 227,821 homes in the North Port-Sarasota-Bradenton within storm-surge risk zones

• Those local homes would cost $42.96 billion to rebuild

• 41,006 Sarasota-Bradenton homes are designated in the “extreme” risk zone, meaning they would be impacted by all hurricane category levels

• 63% of the risky storm surge homes in Sarasota-Bradenton are not required to obtain flood insurance

• 6.5 million U.S. homes have some risk of storm surge damage, with a total replacement value of nearly $1.5 trillion

• Florida has the highest number of homes at risk, with nearly 2.5 million residences worth $490 billion

Southwest Florida has more residential real estate at risk from storm surge damage than almost any other metropolitan area in the country, a new report shows.

If a major hurricane were to strike here, it would cost nearly $43 billion to rebuild the homes destroyed by the storm and subsequent surge in the region, according to data from housing researcher CoreLogic.

Statewide, more than two million homes could be impacted and cost nearly $500 billion to replace.

The area hasn't faced a direct hurricane strike in nearly a decade. But because of explosive new home development and the region's high flood exposure, the potential impact to coastal properties has escalated.

The trend is felt across Florida, which has by far more homes at storm surge risk than any other state — many of which lack protection from insurance coverage.

“We continue to live in a Sarasota bubble where we have not been impacted by a big storm in recent memory,” said Roger Pettingell, a luxury real estate specialist with Coldwell Banker on Longboat Key. “That keeps people's minds off it.”

In all, there are 227,821 homes in the North Port-Sarasota-Bradenton metro area that are within storm-surge risk zones.

Of those, 41,006 homes are designated in the “extreme” risk zone, meaning that they would be impacted by all hurricane category levels, according to CoreLogic.

If a hurricane were to strike, it would cost a combined $42.96 billion to rebuild those homes. That value represents the estimated cost of labor and materials to replace a home that has been completely destroyed.

Only six other cities in America have more real estate at risk — and a higher overall replacement value — than Southwest Florida.

That's largely because of the high number of multimillion-dollar estates and luxury condominium towers on the region's barrier islands.

But local real estate experts question CoreLogic's replacement cost figure.

Pettingell, for one, contends that because many high-end residences are built with storm-resistant material and are on higher elevations, it is unlikely even the most vicious storm would cause almost $43 billion in home damage.

In Charlotte County, there are an estimated 93,299 properties at risk from storm surge. Those homes would cost an estimated $19 billion to replace following a storm, according to CoreLogic.

“It's mostly those stretching to be on the waterfront and buying an older house,” Pettingell said. “They're the ones who're most concerned because they're already at the top of their price range.”

Walls of water

Storm surge occurs when high winds and low pressure combine to cause water to amass inside a storm as it moves over water.

When a storm moves ashore, that force sweeps over land.

Because of its speed and power, storm surge can significantly increase the overall impact from hurricanes.

While scientists have predicted an usually quiet storm season this year, CoreLogic researchers say the report serves as a reminder that the risk of significant damage to Florida homes is a constant threat.

“We don't care about how many storms or the severity. If it hits the wrong place, it can do tens of billions of dollars in damage, and those values can add up pretty dramatically,” said Thomas Jeffery, senior hazard scientist with CoreLogic. “A hurricane can come ashore and mostly cover a metro region, so it's important homeowners look at their coverage, and make sure they have enough because they could be on the hook.”

CoreLogic examined homes along the coastlines of 19 states and the District of Columbia, from Texas to Maine. The researcher used Federal Emergency Management Agency flood zone information and data from Marshall & Swift/Boeckh to determine replacement values.

The report identified 6.5 million U.S. homes at some risk of storm surge damage, with a total replacement value of nearly $1.5 trillion.

More than $986 billion of that amount — or just under two-thirds of the total — is concentrated within 15 metro areas, however, including the Sarasota-Bradenton area.

Florida tops the list for the highest number of homes at risk of storm surge damage, with nearly 2.5 million residences at various risk levels and $490 billion in potential exposure to damage — nearly one third of the national total.

About $166 billion worth of Florida real estate was flagged as “extremely risky.”

CoreLogic's analysis also showed the reasons storm surge exposure varied for state to state.

Florida and Texas were among the top five states for the number of properties at risk primarily because to their extensive coastlines.

Louisiana and New Jersey have smaller coastal areas, but both states have low elevation that allows storm surge to extend farther inland.

Outside FEMA zones

The new report comes amid debate between Congress and real estate professionals over the solvency of the federal government's flood insurance plan.

In March, Congress passed a bipartisan bill that unwinds some of the changes brought about by the Biggert-Waters Flood Insurance Reform Act of 2012. The measure amended provisions slated to hike premiums in many parts of the country, including Southwest Florida.

Many homeowners who live outside FEMA flood zones don't carry flood insurance because they're not required to do so.

Virginia Beach has the highest ratio of homes at risk from storm surge not in a FEMA flood zone, at 86 percent. That was followed by Philadelphia, at 85 percent, and Jacksonville at 76 percent, according to CoreLogic.

About 63 percent of the homes in Sarasota-Bradenton at risk for storm surge are not currently required to obtain flood insurance.

That could leave Florida potentially in tremendous debt if a storm hits, said Don Brown, a Florida insurance agent, former state legislator and insurance lobbyist.

“Some people have made the decision that they'll take their chances and keep their head in the sand,” Brown said. “It's no secret now that we have more exposure in Florida than any other state, and in many cases, we won't be able to replace the damage at these costs.

“It's a disaster waiting to happen.”