by Greg Grootendorst, Chief Economist and Katherine Rainone, Regional Economist
2021’s Atlantic hurricane season came to an official close at the end of November as the third-most active season on record, producing 21 named storms. While Hampton Roads wasn’t directly hit by any 2021 hurricanes, it has been in the past and likely will be again in the future. As sea levels continue to rise, sunny-day flooding becomes more frequent, and rainfall events become more severe, the economic impacts of water ending up where it’s not wanted will become more apparent.
HRPDC’s Coastal Resilience Program has created a new online dashboard that summarizes NOAA storm events data and FEMA National Flood Insurance Program (NFIP) claims at the locality scale throughout Virginia. This dashboard depicts daily and annual summaries of flooding events and total number of claims submitted to FEMA in Virginia, with the ability to filter by locality or planning district, and a mapping feature alongside. As economists, we were quite interested in this data, asking ourselves both how much total money was distributed as a result of the FEMA flood insurance program claims, and how did the events and claims in Hampton Roads compare to the rest of Virginia?
Between 1976 and 2020, Hampton Roads saw a total of 31,611 claims submitted to FEMA for reimbursement due to flooding damage for a total of over $480 million. Out of all the flood loss claims in Virginia, roughly 63% of the total dollar amount and total number of claims occurred in Hampton Roads. This FEMA data likely underestimates the actual flood damage costs for two reasons: 1) it includes information for thousands of claims with no dollar amount, and 2) this analysis only includes claims from property owners with flood insurance. There is an unknown number of structures that may have flooded in the past 45 years without being insured, and those losses would have to be fully realized by the property owner and therefore not included in these calculations.
Figures 1 and 2: Percent of total Virginia NFIP flood loss claims (both total dollar amounts and number of claims) in Hampton Roads. Source: FEMA, HRPDC.
Figure 3: Percent of total Virginia flood events recorded in Hampton Roads.
As shown in charts 1 and 2, from 1976 through 2020, the percent of total flood loss claims and dollar amounts dispersed in Virginia that have occurred in Hampton Roads are trending upwards. Additionally, it’s important to note that there are wide variations in regions by year – for example in 2019, Hampton Roads had a very low number of total claims relative to the rest of Virginia. During July of 2019, Northern Virginia experienced severe flash floods, leading to thousands of claims in NOVA. Alternatively, in 2009 and 2016, over 90% of the flood claims dispersed in Virginia were done so in Hampton Roads, coinciding with a large Nor’easter in 2009 and Hurricane Matthew and Tropical Storm Hermine in 2016.
The second dataset included in the dashboard is from NOAA, and depicts the total number of storm events occurring in a given locality that led to flooding. For the purposes of this regional analysis, the separate events recorded as duplicates in each Hampton Roads locality on the same day were removed, and only the total number of annual regional flooding events between 1996 and 2020 remained. Once again, we can see that the percentage of Virginia flooding events occurring in Hampton Roads has been increasing over time, but while we observed that the total ratio of Virginia’s claims in Hampton Roads has averaged out to roughly 63%, according to the NOAA data, only about 17% of those reported flooding events occurred in Hampton Roads. This could potentially indicate that the flooding events in Hampton Roads are more severe than elsewhere in Virginia, and affect many more properties/structures when they do occur.
It is important to note that these claims only make up a small part of the costs of flooding and sea level rise in Hampton Roads. Projects and studies are being initiated and completed throughout the region to address these flooding issues in order to prevent increased losses in the future – just last month Virginia Beach residents voted to authorize over $550 million to fund the design and construction of 21 projects in the citywide Flood Protection Program, a significant step forward to building a more resilient Hampton Roads.
To view December's full economic monthly report, click HERE.
Annualized Growth in GDP
Gross Domestic Product combines consumption, investment, net exports, and government spending to determine the size and general health of the economy. Real GDP increased 2.1% in Q4 2019 (GDP also grew by 2.1% in Q3 2019). The growth is driven in part by consumer spending, government spending, housing investment, and exports, while imports decreased. There was a decrease in inventory investment (-1.09%) as well as a reduction in business investment reflecting a decrease in structures and equipment.
Retail sales in Hampton Roads, as measured by the 1% local option sales tax, serve as an indicator for consumption in the region. Retail sales have bounced around, but after a surprisingly weak June, they continue to recover handily through to December (seasonally adjusted 3 month M.A.). Sales increased by 7.4% in December, making it Hampton Roads’ best December for total retail sales in recent years. Much of the recent growth in retail sales across the Commonwealth has been the result of increases in the number of online sales that are subject to tax.
New Car Sales
Car sales, as a durable good, may be put off until an individual’s economic prospects improve; thus, the number of new car sales indicates the level of confidence that households in Hampton Roads have in their financial future. Car sales have decreased and stabilized after an unusually strong September, hovering near the averages that have been observed over the past few years.
Hotel sales indicate the performance of the region’s tourism sector. In Q3 2019, accommodation sales decreased by 3.5%, settling at $220 billion for the quarter. This continues a pattern of slowing sales between second and third quarters in recent years, however, Q3 accommodation sales in 2019 increased 5.4% over Q3 2018. This shows accommodation sales are still trending upward from late-2013 lows.
Non-agricultural civilian employment figures are considered the best estimate of labor market activity by the National Bureau of Economic Research. According to data from the Bureau of Labor Statistics, Hampton Roads employment increased for the third month in a row since a recent high in June, to 796,600 positions in December of 2019. This figure represents a 1.05% growth from the same month in the previous year.
Employment Growth by Industry
As the job market grows or declines, there will be some industries whose experience does not resemble the regional trend. Several industries have seen significant decline year-over-year using BLS data, including Administrative & Support and Local government. The Construction and Leisure & Hospitality industries continue to see the largest increases in jobs when compared to the previous year, signs of strength due to their key role in the regional economy.
The unemployment rate is the percentage of the population actively seeking work but unable to obtain a position. Hampton Roads’ unemployment rate plateaued in December 2019 at 2.93%, the same rate it was in November. Comparatively, the national unemployment rate decreased again in December from the previous month to 3.5%, hovering at record lows.
The number of initial unemployment claims is a leading economic indicator reflecting those who are forced to leave work unexpectedly, thus revealing the strength of the job market with little lag time. Seasonal adjusted unemployment claims decreased in January 2020 to 2,438 claims, a decrease from December of 2019 but still above November’s recent low. This January number of claims represents a 17.6% decrease from the same month in 2018.
Permit data signals the level of construction employment and confidence regarding the future trajectory of the local economy. The level of new construction permitting for single family homes in December decreased to 352 permits, but when seasonally adjusted represents a slight increase relative to November. As the market continues to respond to the recently lowered federal interest rates, this indicator will be interesting to watch closely.
Home Price Index
The home price index measures the value of homes by evaluating changing price levels through repeated sales of properties. The index provides the highest quality data available on the trends in the real estate market. Hampton Roads’ home prices increased, yet again, by 4.2% over the previous year in Q3 2019, remaining below both the state and the nation. Regional housing values remain 4.3% below those seen during the peak of the housing boom.
Settled Home Sales
Settled home sales measure the level of transactions on the real estate market over time, and a healthy real estate market should have a consistent level of activity. The levels of existing home sales have been strong recently, with sales maintaining the same average level as during the housing boom in 2005. New construction sales in January saw a slight dip from December, continuing to represent roughly 11% of all sales.
Foreclosures have a significant impact on the real estate market and community, depressing home values on a neighborhood and regional level. Distressed homes’ share of total sales has particularly been shown to impact the sale price of existing homes. The foreclosure level is still elevated from the housing boom, but has been steadily declining, showing some of the lowest rates since 2009. Foreclosures constituted 4.2% of all home resales in December of 2019, down from a recent high of 8.1% in April of 2016 (12-month average).