Florida’s Real Estate Woes—How soaring homeowner insurance costs may affect buyers market

Courtesy: Shutterstock – Image by alphaspirit.it

Just when it seemed like the Florida housing market was in a promising sweet spot for prospective buyers, insurance executives have reason to believe the property insurance market is casting a large shadow that may draw homeowners elsewhere.

The COVID-19 pandemic created a single-home and condo buying surge in the Sunshine State unlike ever before. Out-of-state buyers flocked to Florida by the thousands in search of prime real estate, lenient pandemic restrictions, and warm climate.

But now, Florida has a major insurance problem that could force existing residents and potential newcomers away from the state.

Costly Insurance Premiums & Rising

Many residents will agree that owning a home in Florida is great. Traffic, road infrastructure, and some other things aside—it’s a great place to live if you own your own place.

But, if there is one thing a Florida homeowner will tell you about the experience as a whole, owning a home is VERY expensive. 

All things considered, Florida is the most expensive state in the U.S. for home insurance. That’s right. Not California, not New York, but right here at home. And things are only getting worse.

Despite avoiding the major brunt of storms and ensuing damages during the busiest Atlantic storm season on record, insurance premiums are on the rise.

According to estimates by the Insurance Information Institute, Florida residents are expected to shell out an average of $2,380 in insurance premiums in 2021. This number indicates a 21 percent increase over the $1,960 average in 2018.

Elsewhere, the average American homeowner is expected to cough up an average of $1,297 this year in insurance for their homes: a measly amount when compared to Florida.

Factors causing the prices to soar

  • Hurricanes: As stated above, Florida managed to avoid some of the biggest storms in history last year for the most part. Despite that, the state is still recovering from record claims as a result of Hurricane Irma (2017) and Hurricane Michael (2018). The estimated cost of the claims from those hurricanes was roughly $30 billion.
  • Reinsurance and Litigation: The battle in the courts continues to surge as insurers fight sham roof-related claims and litigation costs. Insurers also contest that reinsurance claims have surged.

What’s Next?

“The industry is in a panic because it is losing so much,” said Barry Gilway, chief executive of Citizens Property Insurance Corp. “Rates will continue to skyrocket, and it absolutely will have an impact on the real estate market,” barring any changes.

If premiums continue to rise the way they are, experts have reason to believe it will affect the market as a whole by pushing away potential buyers.

Currently, Florida lawmakers are considering a set of bills that would help “curb” premium increases, most of which target bogus and illegitimate claims. 

Are you interested in Florida real estate? For stories like this and much more: Florida Insider is dedicated to educating, entertaining, and informing its readers about everything Florida. Easy to read content at the palm of your hands and covering the stories that matter.