Florida's housing market is experiencing a downturn that experts say differs from typical boom-bust cycles. This time, the costs of living with extreme weather are creating long-term changes in home values and affordability across the state, reported Bloomberg.The median home price in Florida dropped 3.1% in April from the same month last year, which marks the biggest decline of any state since 2012, according to data from Redfin Corp. Home inventory has reached near-record highs while the pandemic-era influx of new residents has slowed.
What is causing Florida's housing market decline?
Rising insurance costs and condominium fees tied to extreme weather damage make Florida homes less affordable for many residents. These expenses often exceed mortgage payments or property taxes for homeowners.
Insurance costs have become particularly burdensome. According to the most recent data from the Consumer Federation of America, a Florida homeowner with average credit and a $350,000 home now pays about $9,462 per year for coverage.
That's $789 monthly, a 29% jump since 2021, per Bloomberg.
Why is this housing trend important?
This housing shift signals a permanent change in how weather risks affect property values.
"This is a non-cyclical phenomenon," Jesse Keenan, a real estate professor at Tulane University who focuses on climate adaptation, told Bloomberg. "This is resetting the baseline values of housing in Florida."
Josh Levy, mayor of Hollywood, Florida, told a Senate committee that insurance rate increases "are pushing households — especially those on a fixed income — to the brink."
Data shows the scope of the insurance crisis. Senate Budget Committee research found that nonrenewals by home insurers jumped from 0.8% to nearly 3% between 2018 and 2023, a 280% increase that has forced many residents onto the state's insurance program of last resort.
How Florida's weather costs affect homeowners and communities
When storms hit, many homeowners discover their coverage doesn't provide the protection they expected.
Collin Ray Plate and his wife, Delilah, are retirees living in Holly Hill, a community near Daytona Beach. After Hurricane Milton damaged their home last year, their insurer denied their claim, calling the interior damage flood-related rather than wind-driven. The couple paid nearly $50,000 out of pocket for repairs.
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Definitely 🙁 "What's the point of having insurance if they never have to pay?" Plate asked. Some of his neighbors have stopped buying home insurance altogether because they don't trust it will cover storm damage.
New state rules following the 2021 Surfside building collapse require expensive building updates. The median condo price fell nearly 9% in April to $307,800, compared with just a 3% drop for single-family homes.
While investigators determined that Surfside had some steel-reinforced concrete columns that initially weren't up to code, some of the steel had also become corroded, per KETV and the University of Florida College of Design, Construction, and Planning. Sea level rise and frequent storms also accelerate building deterioration in coastal structures by driving saltwater into foundations and rusting the metal reinforcement.
How communities can adapt to rising weather costs
State officials have made some progress in stabilizing insurance markets by reducing fraudulent lawsuits. Ten new insurance companies have started operating in Florida, and more than half a million people have moved from state-backed coverage to private policies.
However, federal disaster relief funding that communities rely on for recovery projects may become less available. The Federal Emergency Management Agency has already canceled nearly $300 million in community resilience grants to Florida.
If you live in a hurricane-prone area, you can take steps to protect your investment.
Consider flood insurance separately from homeowners coverage since standard policies don't cover flood damage. Research your area's elevation and flood history before buying. Look for homes built to current wind-resistance standards or factor retrofitting costs into your budget.
Improvements such as hurricane shutters, impact-resistant windows, and roof maintenance can reduce insurance premiums for existing homeowners. These minor adjustments can create more resilient homes and lower monthly costs.
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