Florida Home Prices About To Drop 50% After Hurricane Ian?
Florida could see drop of 50% in its home prices following Hurricane Ian because of flood and insurance concerns
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Hurricane Ian struck the coast of Florida last week, leading to devastating housing collapses and ruined environments. Though the hurricane was downgraded as it made contact with the shore, it still wreaked havoc on families living on the peninsula’s west coast. Florida home prices are now dropping due to the tropical storm’s chaotic aftermath.
In the aftermath of Hurricane Ian, Florida home prices could drop by 50% in the Fort Myers area. David Burt, the founder and CEO of the investment firm DeltaTerra Capital, stated that the latest hurricane could be a turning point for the housing market in Florida and nationwide. As climate change continues to amplify natural disasters’ power and recklessness, those living in places prone to flooding may opt to move elsewhere, leaving certain areas destitute of a lucrative housing market.
According to Insider, one of the reasons Florida home prices could drop over the next couple of months is inflated flood insurance costs. Home insurers often look to the Federal Emergency Management Agency’s risk assessment figures to determine which areas deserve higher-risk coverage.
Now that Florida’s west coast is getting a Risk Rating 2.0 for its flooding vulnerabilities, home insurers could increase premiums from $300 a year to over $10,000, which could immensely change the dynamic of the region’s housing demand. Flordia home prices would be set to take a major hit.
Burt agreed that inflated premiums could drive people away from the area, thus reducing Florida home prices by a significant margin. If flood coverage is monetarily unviable, the city of Fort Myers and its surrounding suburbs and towns could see an exodus and a drop in housing demand. Even though other states experience different threats from natural disasters, Florida’s west coast is the only area where home insurance coverage would multiply this drastically.
Burt and his firm are also assessing what the housing market will look like when homes are rebuilt on the peninsula’s coast. Prospective buyers may look at the heightened flooding premiums as well as the potential for future natural disasters and decide to buy elsewhere. A lack of demand could catalyze a massive reduction in Florida home prices, with many analysts projecting that the state’s hazardous west coast will turn buyers off.
Analysts found that Lee County, the county that’s comprised of Fort Myers and adjacent southwest Florida suburbs, holds the most considerable disconnect between what homeowners pay for flooding coverage and how much they should be paying for the proper insurance. In May 2021, DeltaTerra discovered that Florida home prices could decrease by 52% once flood-protection payments were adequately factored in.
Homeownership in Florida has been rising since the 2008 market crash. One of the critical factors of the peninsula’s housing cost escalation is home insurance, with owners needing to buy hefty insurance to cover damages from possible natural disasters. As companies increase their premiums for flood and damage coverage, the price of homes accelerates with the updated insurance prices.
Due to Fort Myers being directly in Hurricane Ian’s path, the city may take a while to be reconstructed to its original standard. Even with rehabilitation efforts, the surrounding area may experience a devastating lack of housing demand over the next few years.
