The Florida insurance crisis threatens home ownership by pricing many buyers right out of the market.  Most people do not realize what has happened in the last year, and they are about to find out.  Current homeowners will be affected at policy renewal, or upon policy cancellation.

Florida Insurance Crisis Threatens Home Ownership

Already we have a home affordability crisis. The Florida insurance crisis threatens to make the affordability crisis even worse. Let’s break this down into two areas. Flood insurance and property insurance.

Flood Insurance

The National Flood Insurance Program upgraded their program to Flood 2.0 What this means is properties that were previously in flood zone x and other non-required flood insurance areas have been reclassified.  Flood insurance may now be required.  The other startling fact is most properties that were in X paid an even $677/yr.  We are now seeing X properties with premiums over $3,000.

We have seen some flood zone A policies more than $6,000/yr.  If you already have a NFIP policy, they cannot raise your rates more than 18% per year.  However, after six years you will be maxed out at the new rate.  I just looked up a property that was $677 last year and now it is $6,4000 this year.  That is $533/mo, just for flood insurance. Now we must add in homeowners’ insurance, and we haven’t even gotten to that yet.

We would suggest calling your insurance agent to see if your property has changed.  There are some private flood policies available, but when they fill up, they stop writing policies.  If you have a NFIP policy, do not cancel it without taking to your insurance agent first. It may make your home difficult to sell without it.

Property Insurance

7 insurance companies have recently filed bankruptcy and three others have stopped writing new policies altogether. If you have a tile roof over 20 years old, some are cancelling policies. Others are doing it at 30 years old. Shingle roofs are between 10-20 years. We are losing options. If you are selling a home, you may be required to replace a roof. Even if you’re not selling, you may have to replace your roof.  Insurance for older homes is increasing rapidly as well.

Insurance companies are looking for any reason to not cover the home, and any reason to charge a higher premium. They lost a lot of money, and insurance companies do not like losing money. Insurance companies are risk adverse going forward, so anything that looks like it could have an upcoming claim is being excluded.

They are checking age of water heaters, plumbing valves, air conditioners, roofs, truss tie downs, etc.  Some homeowners are seeing their rates doubling or tripling, while others are being canceled.


Triple Whammy

Home buyers are being hit with rising flood and property insurance along with rising rates. It is limiting how much they qualify for. In fact, some buyers on new construction are cancelling contracts because the interest rates are higher now than when they signed contract and they no longer qualify for the loan. Same with the flood insurance on some lots. Homeowners insurance on new homes is still affordable.

Typically rising interest rates curtails prices because it affects affordability. We still have strong demand and a low supply of homes on the market, although it is rising. Listing inventory today is at the highest it has been all year.

Future of Real Estate Prices?

The question is going to be, will the number of people moving to Florida offset or exceed the number of people priced out due to rising rates? The answer to that question will determine the future of real estate prices in Florida. Marketing to out of state markets will be crucial to getting top dollar for your home.

If you have real estate questions, call Sande or Brett Ellis 239-310-6500. Or you can get an instant and Free online home valuation at Be informed. Rates are expected to climb rapidly in the coming months. The choices you make today could determine your future!


Should I buy Real Estate Now or Wait for Prices to Drop?

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