Surging insurance costs threaten to erode Florida’s home values
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- Опубликовано: 12 окт 2024
- The state of Florida is bracing for Hurricane Milton’s wrath less than two weeks after Hurricane Helene battered the Gulf Coast. The back-to-back hurricanes are a devastating reminder that 1 in 3 Florida homes is susceptible to storm surge flooding from hurricanes, according to Guidewire.
As homeowners pick up the pieces of their lives, another storm rears its head, one that is set to ravage a much larger portion of the state. Because of storms like these, Florida is the most expensive state in the country for home insurance.
“We’ve always pitched ourselves as an affordable place to live, and from a tax perspective, it is,” Chuck Nyce, a professor of risk management and insurance at Florida State University, said. “But I would argue today in Florida that this is something that people need to be aware of: insurance costs are high.“
The average annual cost of home insurance in Florida neared $11,000 in 2023. Insurify projects it will climb to $11,759 by the end of the year. That cost does not include flood insurance, which typically requires a separate policy.
“When you’re talking about spending $10,000 or $15,000 a year for homeowners insurance coverage, $1,000 a month or more, that is part of your mortgage payment,” Nyce said. “And that has to be a cost that’s factored into the cost of living here.”
While property insurance’s share of the average mortgage payment is going up nationwide, in places like Miami, that burden is twice as big.
For single-family homes that include insurance in escrow, ICE Mortgage Monitor said the national average share is around 9.4%, while the property insurance share in Miami is 19%. That is second only to New Orleans, Louisiana, at 25%.
“A lot of research is suggesting that both the risk and the rising insurance premiums are depressing home prices compared to what it would be,” said Shan Ge, an assistant professor of finance at NYU Stern School of Business.
Ge has been researching insurance trends for years. Her published research shows when insurance rates go up, two things happen: homeowners buy less coverage and home values go down.
“And this drop in home values is pretty dramatic,” Ge said. “Buyers are going to be willing to pay less for property compared to a world where Florida does not face climate risk, does not face all these disasters, and does not face these increasing insurance premiums.”
Ge told Straight Arrow News she hopes developers will take her research into account in Florida and elsewhere.
“When they see these prices not as high as they would be in this counterfactual world, we’re hoping that will slow down the development and discourage more people from moving into risky places,” Ge said.
In August 2024, the median sales price of a single-family home in Florida dropped from a year ago for the first time in at least five years, according to data from Florida Realtors. For condos, which face not only higher insurance costs but mandatory maintenance needs, August marked the second month of annual price declines.
So far, insurance premiums at a premium have not deterred the rampant migration to the Sunshine State, but it may influence who can afford to come in and who may be forced to leave.
“Insurance prices risk, and if you can’t afford to live there, you shouldn’t move there,” Nyce said. “So it’s a really difficult problem. I always tell people, ‘I can’t afford to live in Monaco, and I can’t afford to drive a Bugatti, but I know that.’ It’s much more difficult to tell someone who’s maybe lived somewhere for generations that you can’t afford to live there anymore.”
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This is good news. Most houses in the U.S. are severely overvalued.
Not really... Your currency has been devalued by progressive agenda... Trillions of dollars have been transferred in value from cash holders to asset holders under the Biden Harris Agenda...
It's not just the cost of insurance... it's the physical risk to your life and the major inconvenience to have to rebuild.
Here in South Mississippi after hurricane Katrina they started building houses at 20+ foot from the ground to the bottom of the house for cheap insurance.
I suggest one look at national sea level rises over the past 50 years and projected rises for the remainder of century.
True, but then you have people like Meatball Ron, who pass laws that forbid the use of 'climate change' no joke.
... I dont think thats whats going to erode their value, my dudes
Hurricane alley is not an easy place to live. Do your homework before moving there
The developers, mortgage, and realty industry is largely to blame for this fiasco.
I think you missed out the biggest one. PERSONAL RESPONSIBILITY
Welcome to CLIMATE CHANGE !!
When you think of how much the insurance company has stolen from Florida, I’d make every company that had operated their over the last few decades to help pay for everyone’s home… Even if those companies have left the state!
Also, I think the federal government should Provide a low cost flood insurance. I believe in the free market and none of the companies that should be there are there so the government should do it ?
No people shouldn't live in flood prone areas. These homes are at risk to be under water once a year. Our government cant even fund fema properly without giving the money to illegals or to Ukraine,isreal or whoever.
No one will agree to a federal flood insurance tax.
Homeowners need to read their insurance police and have a understanding of what their insurance is actually covering.
So, you expect taxpayers in the rest of the country to help pay for those in Florida. And where do you think the federal government gets the money for flood insurance? You want those who can't afford ocean and riverfront properties to pay for those who choose to live there? Insurance companies haven't stolen anything, if it was that lucrative, they would still be selling there.
Florida has been the death kiss of several insurance companies.