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Huge Reconstruction Costs Leave Homes Underinsured In The Face Of Natural Disasters

A. Lawrence

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defense stocks to watch

Homeowners in the U.S. experience a hard time. Irrespective of the place where you live, the chances are high that you’ll have to deal with natural disasters. Extreme weather calamities like floods, hurricanes or wildfires are causing immense damage. Many homeowners are underinsured against any natural disaster.

Every part of the country experiences at least one peril or another. This can be in the form of hurricanes or tornadoes, snow or hail, floods or tropical storms or earthquakes. This is leaving a big hole in the pocket of the homeowners almost leaving them with nothing. According to new research, much of the nation’s housing stock may be underinsured against these disasters.

The Costs Are Mounting

Rebuilding homes involved huge costs. And these costs have risen drastically in the past two years. The major reason behind the rise in the cost of reconstruction is a shortage of labor. New tariffs on materials are also adding to these rising costs.

However, if this consistent increase in the costs are not monitored and not factored recurrently into insurance coverage in disaster-prone areas, homeowners would have to bear huge losses that could even reverberate through the mortgage market.

According to the National Oceanic and Atmospheric Administration (NOAA), there have been 14 natural disasters in the last year itself. These have cost $91 billion to the United States. This was the eighth year in the row with at least eight disasters in the billion-dollar range.

New data from CoreLogic, shows numbers have come up on the mounting risks to the real-estate. This was found while evaluating the four disaster-prone areas in the US. Amy Gromowski, the senior leader of analytics at CoreLogic feels that “Underinsurance issues can cause financial devastation for property owners, artificially low coverage limits for insurance carriers, and increased loan delinquencies.”

What About Disaster Prone Areas

Homeowners who experience natural hazard events, such as the California wildfires, incur personal and financial devastation. Many aren’t able to rebuild their homes, which prolongs the region’s recovery and often causes homeowners to default on their mortgages.

In one of the four disaster-prone areas – California, 110,000 Southern California properties are in very high to extreme risk of wildfire. The risk is beyond $46 billion, keeping the average reconstruction cost to $400,000. When compared,   these costs are higher than they were two years back.

The cause behind the rise remains the – increase in the cost of labor and materials. Mathematically speaking thus, if just 1% of the homes at risk were a complete loss in a wildfire, the undervaluation of that 1% would be $25 million if insurance coverage is not current.

Corelogic categorized approximately 1.1 million properties at very high to extreme risk of loss from storm surge in the coastal hurricane-prone area along the Northeast Atlantic and Gulf Coast regions. CoreLogic further calculated the cost involved to reconstruct the at-risk properties of Florida to be $240 billion based on the recent increase in the costs.

This highlights the key fact that the financial impact of not updating reconstruction costs for two years is extreme. CoreLogic explains, “If a catastrophic event were to affect only 5% of homes and cause just 30% storm surge damage to those 5% of properties, the reconstruction cost undervaluation is approximately $205 million.”

Redevelopment Costs Are Rising

However, these are the risks only at the coastlines. These are secluding the impact if any inland flooding like Hurricane Harvey occurs.  There has been an upswing of 7% in the redevelopment costs in Houston in the past two years. There has been a potential deficit in insurance coverage in tornado-prone areas.

In Oklahoma alone, which averages about 56 tornadoes per year, about 1.3 million properties with $257 billion in reconstruction costs are at very high or extreme risk. The current cost of reconstruction has risen by 6.6% in the past two years.

Thus, insufficient insurance coverage would increase the risk to the mortgage market as well. Tracing evidence to substantiate, CoreLogic reported that following three major hurricanes in 2017, serious mortgage delinquency rates tripled. Houston and Cape Coral, Florida and San Juan, Puerto Rico were key areas of delinquency.

“The disruption of a family’s regular flow of income and payments, as well as substantial loss in property value, can trigger mortgage default; especially if homeowners are underinsured and cannot afford to rebuild.”

Frank Nothaft, Chief Economist at CoreLogic

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Stock Price Newsletter – September 20, 2019

Joe Samuel

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defense stocks to watch

Microsoft (MSFT) Stock Price Jumps On Increased Dividend and Buyback Announcement

On Wednesday Microsoft Corporation (NASDAQ: MSFT) shares gained 1% in extended trading after the company announced that it was raising its quarterly dividend by $0.05. But there’s more to this story than meets the eye.

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Microsoft (MSFT) Stock Price Jumps On Increased Dividend and Buyback Announcement

Joe Samuel

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On Wednesday Microsoft Corporation (NASDAQ: MSFT) shares gained 1% in extended trading after the company announced that it was raising its quarterly dividend by $0.05.

Share Repurchase Program

The company has also authorized a $40 billion stock buyback. Under the leadership of CEO Satya Nadella, the company has been buying back its shares. In the fiscal year ended June 30, Microsoft bought back it’s a stock worth around $19.54 billion. The year before stock buybacks were around $10.72 billion. In the last five years under the tenure of Nadella, the company has seen it’s stock almost quadruple and exceed a trillion-dollar market cap.

The company has aggressively been repurchasing its stock and at the current rate, they are likely to use all the $40 billion in the latest repurchase program within two years. The new share repurchase program does not have an expiration period but the company could choose to terminate it any time.

Growing Dividends

The company is increasing its dividends by 5 cents barely a year after increased them. The board of directors approved a $0.51 quarterly dividend which reflects an 11% increase over the quarter before. This translates to $2.04 annually. Microsoft has been paying dividends to stockholders since 2003 and it has been pumping up its quarterly dividend each year.

Microsoft has indicated that it will pay shareholders of record on November 21 a dividend of $0.51 on December 12. The 11% increase is an improvement from last year’s dividend increase of 9.5%. The increase is slightly more than the company’s average dividend growth percentage of around 10.4%.

The share repurchase program and dividend increase are a no brainer for Microsoft. In 2019 the company brought around $38.3 billion in free cash flow of which $13.8 billion was given to shareholders in the form of dividends. The company returned around $33 billion to shareholders this is inclusive of the cash spent on stock repurchases.

Considering how trivial the company’s dividends are relative to its free cash flow, it appears like Microsoft will keep increasing its dividends each year.

A Clear Focus On Groundbreaking Technology

Global spending on security solutions is projected to reach $7.4 billion in 2019 and increase to over $11.3 billion by 2025 with a CAGR of 8.2%.  The urban Security explosives and Weapons Detection market is slated to grow to nearly $7.5 billion by 2025 and is forecast to see consistent growth for the next several years [2].

What does this mean? Well, for investors it could signal big opportunities but with so many large companies targeting surveillance systems and weapon detection devices as a “go-to,” is there anything that could truly disrupt this market?

In short, yes

Liberty Defense (SCAN.V) (LDDFF) Is Positioning To Change The Face Of Threat Detection For Good

The truth of the matter is that mass shootings now happen more than once a day in the US and as we’ve come to find, there’s no real way to stop these attacks after an attacker enters a space. This is where the real opportunity is: stopping an attack before someone even enters a vulnerable space.

Liberty Defense (TSX: SCAN.V) (OTC: LDDFF) plans to do that using HEXWAVE, a next-generation high-tech security scanning system that will use advanced, low-power radar, 3D-imaging, and Artificial Intelligence (AI) to screen people at public gatherings such as sports games, unobtrusively.

Liberty Defense (SCAN.V) (LDDFF) Is Positioning To Change The Face Of Threat Detection For Good

The truth of the matter is that mass shootings now happen more than once a day in the US and as we’ve come to find, there’s no real way to stop these attacks after an attacker enters a space. This is where the real opportunity is: stopping an attack before someone even enters a vulnerable space.

Liberty Defense (TSX: SCAN.V) (OTC: LDDFF) plans to do that using HEXWAVE, a next-generation high-tech security scanning system that will use advanced, low-power radar, 3D-imaging, and Artificial Intelligence (AI) to screen people at public gatherings such as sports games, unobtrusively.

Liberty Defense WSJ

The advanced attack prevention system can detect if someone is armed before they enter a building using radar energy and Artificial Intelligence (AI) to detect weapons and explosives in real-time. You may be thinking that the processes and screening technology that you see in airports can achieve the same thing in our communities.  

Urban Threat Detection

But we’re talking about urban detection; where high people traffic flow and attempts to provide airport-like screening processes can be extremely disruptive to business activity because of security entry delays. 

As important to providing a higher rate of threat screening is that there also needs to be a way to detect other potential mass attack weapons including explosives, pyrotechnics and other non-metallic threats.

Utilizing a new disruptive technology under an exclusive global license from MIT (Massachusetts Institute of Technology), Liberty Defense (TSX: SCAN.V) (OTC: LDDFF) is developing HEXWAVE.

Liberty Defense WSJ

The advanced attack prevention system can detect if someone is armed before they enter a building using radar energy and Artificial Intelligence (AI) to detect weapons and explosives in real-time. You may be thinking that the processes and screening technology that you see in airports can achieve the same thing in our communities.  But we’re talking about urban detection; where high people traffic flow and attempts to provide airport-like screening processes can be extremely disruptive to business activity because of security entry delays. 

As important to providing a higher rate of threat screening is that there also needs to be a way to detect other potential mass attack weapons including explosives, pyrotechnics and other non-metallic threats.

Utilizing a new disruptive technology under an exclusive global license from MIT (Massachusetts Institute of Technology), Liberty Defense (TSX: SCAN.V) (OTC: LDDFF) is developing HEXWAVE.

Click Here To Learn More About Liberty Defense and its HEXWAVE

defense stocks weapons detection
Disclaimer: Pursuant to an agreement between MIDAM VENTURES, LLC and Liberty Defense Holdings Inc. Midam was hired for a period from 06/1/2019 – 9/30/2019 to publicly disseminate information about Liberty Defense Holdings Inc. including on the Website and other media including Facebook and Twitter. We were paid $250,000 (CASH) for & were paid “0” shares of restricted common shares. We may buy or sell additional shares of Liberty Defense Holdings Inc. in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information. For previous compensation see our FULL DISCLAIMER HERE

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Stock Price Newsletter – September 19, 2019

Joe Samuel

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top biotech stocks to watch

Acadia (ACAD) Stock Price is up 60% This Month; Bullish Signal For Biotechs?

ACADIA Pharmaceuticals Inc. (NASDAQ: ACAD) had been one of the better-known strugglers in the industry. That was reflected in the stock price as well. But recent developments have breathed new life in the stock, which could be an indicator for the biotech industry at large.

Click Here To Read More


Advanced Micro Devices (AMD) Stock Price Consolidates After the Recent Rally: What Next?

The Advanced Micro Devices, Inc. (NASDAQ:AMD) stock has now reached such a stage according to keen observers and hence the stock is now trading within a very narrow range as the squeeze continues. In such a situation, it is only natural for investors to wonder which way this whole thing is going to go in the short term.

See For Yourself


Multi-Billion Dollar Markets Are Ready For A Shake-Up; 1 Biotech Stock Could Hold The Key

There’s no denying that biotechnology is one of the hottest markets in the world. Right now a multi-billion-dollar segment is ready for a shakeup and one biotech stock could hold the secret to doing just that!

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