Daily Real Estate News  |  September 20, 2005  |   Analysis: Nearly 1 Million Homes Damaged By Katrina An analysis conducted by The Enterprise Foundation shows that nearly 1 million homes were destroyed or damaged by Hurricane Katrina, and the amount needed to repair or rebuild those homes will cost about $87.6 billion. Of that amount, much of it will be covered by insurance and other resources available to property owners, but $32.7 billion will be needed in federal funding to help pay for the rebuilding efforts, according to the Columbia, Md.-based nonprofit organization, which released its analysis Monday on the total costs to repair and rebuild homes in the areas hardest hit by Hurricane Katrina. The rest of the rebuilding costs will be paid by insurance coverage, home refinancing, owner reserves, and payments of up to $26,500 per home from the Federal Emergency Management Agency, says Paul Werwath, vice president for program services for The Enterprise Foundation, who oversaw this analysis. Werwath says Enterprise will continue to update its analysis as more accurate damage assessments become available from the American Red Cross and FEMA. “We, like everyone else, did not have complete information,” Werwath says. But his organization felt the need to provide “a worst-case scenario” for the amount of federal funding needed to rebuild the devastated areas to inform the Bush administration as it is currently developing federal rebuilding legislation, he says. Werwath says that Enterprise wanted to provide a proposal for how the federal funds should be spent. “Those decisions have not been made and will take a long time to be me made,” he says. “But we figured since there’s legislation being developed, we wanted to put a model out there.” The analysis shows that 455,000 rental and owner-occupied homes in 16 counties in Mississippi, 13 parishes in Louisiana, and three counties in Alabama must be rebuilt entirely and another 475,000 rental and owner-occupied homes in the three states need repairs that range from minor to substantial. Enterprise worked with the Urban Institute, using Census 2000 data and damage assessment maps provided by AIR Worldwide Corp., to analyze the damage to homes in the 32 counties. Werwath says the analysis shows that the poorest in the affected areas were expectedly the least insured and will likely need the highest percentage of federal funding for rebuilding efforts. In the 32 counties analyzed, there were 150,000 owner and 161,000 renter households that had less than $20,000 per year in household income. This group will require $17.9 billion in federal funding for rebuilding and repairs, according to the analysis. “We assume much more federal assistance will be going to the poorest households, and that will phase out somewhere around $50,000 in household income,” Werwath says. “This is in line with previous disasters where federal funding had some means testing associated with it.” But Werwath warns “there’s a second disaster waiting to happen.” Since many of the affected homes did not have flood insurance, many homeowners who had their homes completely destroyed will be left with empty land that is uninsurable, no money to rebuild, and mortgage payments that still need to be made. “Unless, there’s rebuilding funds given to these families, you can imagine the meltdown that will occur, the bankruptcies and the foreclosures,” Werwath says. —Haley M. Hwang for REALTORŪ Magazine Online