(DailyDig.com) – Analysts say the market for real estate in Florida might take a hit if the state’s persistent house insurance crisis, caused by the departure of private insurance companies numbering over one dozen from the state between the years of 2022 and 2023, and the state’s heightened vulnerability to hurricanes are not addressed.
According to the most recent statistics from “Triple I,” the Insurance Information Institute, homeowners in Florida spend an average of nearly $6,000 per year on homeowner’s insurance, which is much more than $1,700, the national average.
In order to safeguard their assets and provide mortgages, banks expect homeowners to have homeowner insurance policies. However, very few individuals can afford to do so on their own.
According to economist Benjamin Keys from the University of Pennsylvania, the housing market cannot operate unless the insurance market is also operational to provide a proper mortgage market.
More people are living in danger as a consequence of more severe disasters, like hurricanes, and higher restoration costs, according to Keys, who also noted that severe weather is becoming more common in Florida. Due to the high volume of claims from severe storms over the last several years, a number of private insurers have gone bankrupt or just left the state.
According to real estate investor Sean O’Dowd of Chicago, the Florida housing market is set to take a major hit from the state’s continuing homeowners insurance issue. According to him, no mortgage lender would even consider a loan application without insurance documentation.
He elaborates by saying many potential home buyers can’t afford to purchase a house because the monthly cost of insurance is as large as the monthly principal and interest on a mortgage.
The real estate market would suffer, according to O’Dowd, since homeowners would have to lower their prices to sell. O’Dowd said that homebuyers will also feel the effects of the crisis, just as homeowners will.
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