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Burned Forest

Natural Disasters and Homeownership
Key Takeaways from the MISMO Winter Summit Panel

Led by PPG Partner Martha-Rosalind Stainton, the panel examined the growing impact of natural disasters on housing and consumer preparedness.

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Written by: Sam Chapin, Manager at PPG

On Monday, January 13, 2025, in Miramar Beach, FL, PPG Partner Martha-Rosalind Stainton led a panel focused on preparing consumers to be responsible homeowners in the face of natural disasters, which featured panelists from the housing counseling, lending, information services, and regulatory sectors.  

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PPG Partner Martha-Rosalind "MR" Stainton (pictured far right) leads the panel on their discussion of homeownership and natural disasters (Photo: MISMO)

total est. cost of damage from January L.A. wildfires

$250bn

The panel was held as devastating wildfires ravaged the Los Angeles area, resulting in destruction, displacement, and financial losses expected to exceed $250 billion (AccuWeather) – making it the costliest fire in United States history. Despite the record-level damage, the devastation that has occurred and will continue to impact the Los Angeles community for years to come is not a wholly unique occurrence.  

Natural disasters are increasing in frequency and intensity across the United States. 73 natural disaster events resulting in greater than $1B in damages occurred from 2022-2024, which is a staunch increase from the average of nine (9) $1B+ (CPI-adjusted) annual natural disasters from 1980-2024. The 2022-2024 natural disasters cumulatively resulted in $461.8B in losses (NOAA).  

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The graph above shows the number of weather- or climate-related events that incur more than $1 billion of losses per year in United States (NOAA)

number of $1+ billion dollar natural disasters between 2022 and 2024 in the US

73

The increasing risk and far-reaching impact of natural disasters are critically important to the housing market, but building awareness and understanding of the appropriate resources to prepare for and respond to natural disasters remains a challenge.  

The panel approached these challenges through focusing on resources and services available to consumers pre- and post-purchase, and guidance on how to prepare for and respond to these events as homeowners. The discussion centered on three (3) primary themes: risk awareness, costs and insurance, and post-disaster resources available for consumers.   â€‹â€‹â€‹

  • Risk Awareness: Natural disaster risks should be incorporated into a prospective homebuyer's decision to purchase a home. Housing counselors are helpful resources to educate prospective homebuyers on these risks, and free resources are available to consumers from entities such as FEMA, FHFA, and CFPB to measure location-based risks and support natural disaster preparation. Although risks vary by geographic location, it is important to note that risks evolve, and preparation is essential regardless of whether an area is labeled "high risk."  

  • Costs and Insurance: Insurance costs have increased by over 33% on average in the US from 2020-2023 (NYT), with disaster-prone areas significantly higher. In some disaster-prone areas, taxes and insurance (T&I) now exceed 50% of monthly mortgage payments (WSJ), which has further threatened housing affordability. Awareness of insurance costs and coverage, as well as homeowner's association (HOA) requirements, has become an increasingly important element in the homebuying process. Housing counselors offer support in these areas, and it is important to ask questions regarding the current and expected future costs beyond principal and interest (P&I). â€‹

average increase of insurance premium from 2020-2023 (NYT)

33%

  • Post-Disaster Resources: Natural disasters have a significant physical and emotional impact on communities, and the first priority should always be personal health and obtaining basic life needs. Once homeowners are ready, the next step is to contact your insurer and servicer for support and resources. Local governments and non-profits are excellent resources following these events as well, and they tend to respond quicker than national organizations such as FEMA and Red Cross, who provide valuable assistance but may need more time to mobilize. Additionally, CFPB offers an extensive suite of digital resources to help consumers respond to natural disasters, including a checklist of steps to stabilize finances.  

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The map above shows the date and location of weather- or climate-related events that incurred $1+ billion of loss each in the United States in 2024 (NOAA)

The panel concluded with each panelist providing one recommendation for how consumers could better position themselves today to respond to natural disasters, and the responses had a common theme: Preparation. Prior to purchasing a home, they underscored the importance of asking the right questions and ensuring that you understand your risks. Post-purchase, the focus shifts to resilience planning: Having a plan, preparation checklist, and emergency fund to withstand hardships. 
 

PPG's Martha-Rosalind Stainton and Sam Chapin, Chair and Vice Chair of the MISMO ESG CoP, will continue to analyze the risks and impacts of natural disasters on the housing market and collaborate with the MISMO network to develop standards and resources to help mitigate challenges.  

Questions? Please contact Martha-Rosalind "MR" Stainton and Sam Chapin

Sources Cited

© 2024 by Potomac Point Group

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