Florida is halfway through another Hurricane Season (officially defined as June 1 through November 30), but is right now just entering the peak of seasonality. Recent years have produced some horrible storms, causing several huge financial losses (those over $1 Billion each). While zealots cite this statistic to enhance their climate change arguments, the truth is much more complicated.
Continued population growth, heavily slanted toward coastal Florida, has stimulated development and demand. Prices have risen accordingly, with the top 2 cities in the country for home price appreciation since COVID-19 being in Florida. Miami and Tampa share this distinction, with approximately 70% increases in home prices. Insurance costs, especially for Homeowners, have been responsive to the large demand and rising prices. High insurance costs are now driving many people out of the home-buying market.
Tallahassee, we have a problem.
Contributing to insurance inflation are lawsuits brought against insurance companies. To me, the easiest thing in the world is to simply blame lawyers for everything that is wrong in society. While our insurance problem has an element of overly aggressive attorneys, no one profession can be blamed for a monumental and complex problem.
Politicians must shoulder some blame, as Florida laws are generous and conducive to lawsuits. Of course, many lawmakers are attorneys, but the body of legislators can help to shift the favoritism back to “the people.” Some changes have been made, but others remain under prolonged discussion.
So far, our real estate prices continue to rise, exacerbated by the COVID-19 migration out of high-tax, overcrowded states. If the Florida market becomes unaffordable to most Americans, the real estate appreciation we enjoy today will begin to fade. A reasonable goal would be stabilization with slower growth.
We hear stories of citizens living in Miami being forced out by unaffordable rent increases. The worst example I have heard involves an overnight increase from $1,500/month to $4,000/month for an apartment in Miami. While extreme, the example is emblematic of a growing concern for Floridians. As I see it, we have a real estate bubble forming, perhaps not as extreme (yet) as in 2008, but foreboding in the absence of changes from our elected leaders.
Recent modifications, stimulated by our hands-on Governor, have created an environment that is once again attracting insurers back to Florida. While 8 new carriers have been approved so far, we have not regained the competitive level lost to the 11 carriers that exited the state over recent years. Competition and new laws are needed to slow or reverse the assault on homeowners’ pocketbooks.
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