Once the flood water recedes along Texas' Gulf Coast, property owners may find they are underwater financially.
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Morningstar Credit Ratings found 1,529 properties, with an allocated property balance of $19.4B, may be at elevated risk because of major flooding by Hurricane Harvey. These properties, backing 1,277 loans in commercial mortgage-backed securities, are in the 11 Texas counties that were declared major disaster areas by the Federal Emergency Management Agency.
Residential owners have been particularly hard hit as many areas are evacuated. On top of flood damage, owners will likely face drops in valuation. Four separate academic studies following past flood events show values typically drop by at least 15%, the Houston Chronicle reports.
The fourth-largest metropolitan area in the United States has effectively closed for business while citizens deal with flooding. The lost commerce and property damage could cost the city up to $50B in economic activity, according to the Greater Houston Partnership and the consultancy Moody's Analytics.
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