FL - Florida's coastal homes may lose value as climate-fueled storms intensify insurance risk
Climate-fueled disasters like Hurricane Ian are wreaking havoc on home values across the nation, but Florida’s messy insurance market makes it one of the most stressed, new research out of a nonprofit climate modeling group indicates.
High insurance premiums and a state-backed requirement that homeowners covered by the state-backed insurer of last resort enroll in the National Flood Insurance Program over the next three years could drop home values up to 40% in Florida in the next 30 years, data provided by First Street Foundation shows. And climate and insurance experts say that may further gentrify Florida’s coastal regions and barrier islands.
Using what First Street representatives described as a typical institutional-investing calculation, First Street Foundation found some homes, adjusting for 2023 insurance costs, have already lost up to 19% of their value.
The News-Press reported earlier this month on middle-class families being forced off Fort Myers Beach due to the rising costs associated with living on a barrier island in a time of stronger storms, including more stringent, expensive building requirements and a high demand for Beach property.
Experts say this trend will likely continue in coastal communities as high-income buyers who can afford to go without insurance rebuild and repair out of pocket. They say it will take a concerted effort among state and federal officials, as well as insurance and reinsurance companies to avoid climate-spurred migration and subsequent gentrification of Florida’s coast.
Geographer Zac Taylor, a professor with the Delft University of Technology in Norway, studies the connection between climate change and the insurance industry in Florida. Taylor uses they/them pronouns.
They urged caution in reassessing home values but agreed that this was a possible outcome based on current climate models.
Some of Florida’s more vulnerable coastline may even see corporations purchasing homes with the intent to rent them out, Taylor said, though real estate investor purchases of single-family homes dropped 45% in the second quarter of 2023, compared to a year ago, per realty company Redfin.
Soon, "only wealthy people will be able to afford to remain in coastal areas,” said Taylor.
Unsafe places, lost communities
Indeed, gentrification of Florida’s coastline may have already begun in areas hardest-hit by Ian.
This is likely to continue as a number of factors drive up the costs associated with living along the Sunshine State’s coast thanks to sea level rise, a 2022 study out of Florida State University predicted.
