CHANDAN KHANNA/Getty Images
- Some Florida homeowners are reevaluating their costs and comfort with risk post-Hurricane Helene.
- One seller near St. Petersburg slashed the asking price on their home, which was flooded, by 40%.
- Some weigh whether homeownership in Florida is worth it given the high cost of both insurance and homes.
Days after from Insurify, and Capital Economics found those premiums are rising at the fastest rate in 20 years.
Palm Beach agent Holly Meyer Lucas said many homeowners who aren’t required to purchase flood insurance choose to go without it.
“So many homeowners have dropped flood insurance or whittled their own insurance down to the absolute minimum,” Meyer Lucas told Business Insider.
This creates a particularly thorny situation as flood and wind insurance are often separate policies, Meyer Lucas pointed out. So, if a homeowner lives outside traditional flood zones, they may forgo specific flood protection, but still pay for wind and homeowners insurance. But when they are hit with a historic storm surge like Helene, it becomes difficult to separate what was solely water damage.
“It basically makes the home a total loss if they don’t have flood insurance,” Meyer Lucas said.
Meyer Lucas anticipates more situations where fed-up Florida homeowners, who may have more equity in their homes than cash to repair, choose to cut their losses and sell as quickly as possible.
“We’re going to see a lot of people needing to sell their homes because they can’t afford the remediation,” she said.
It’s hard to predict if Helene will sink home prices — homebuyers still love Florida
Even with the risks, multiple experts told Business Insider it’s hard to say whether real-estate prices will immediately falter in the Sunshine State.
“We have not seen an event, even one like Hurricane Ian, that has had an industry-shifting effect on the real-estate market,” Jon Schneyer, the catastrophe response director at data firm CoreLogic, told Business Insider.
It’s true that some people may leave. The Wall Street Journal reported that many homeowners in Shore Acres, Florida, a coastal town six miles outside St. Petersburg, want to sell to escape the flooding. And some of the most dire forecasters predict that sell-offs like this could bring down property prices.
Cameron told BI that Shore Acres was known for flooding before Helene, and while she can see more inland properties, which are not in flood zones, increase in price, many people prefer to rebuild or move locally rather than leave the state entirely.
“I think the people really want to live here,” she said. “And I think the demand is still going to be very high to live here in Tampa, St. Pete, and Sarasota.”
Still, some experts believe risks haven’t been properly baked into home prices, resulting in a $50.2 billion overvaluation in Florida’s housing market, according to a recent study published in Nature.
“In many parts of the US — and particularly coastal counties, but also in parts of Appalachia as well — housing markets are not efficiently pricing flood risk into home values and that’s causing this housing bubble to occur,” Jesse Gourevitch, one of the study’s authors and an economist at the Environmental Defense Fund, told Business Insider. “In Florida, there’s really high flood risk, which I think is broadly understood, but that the cost associated with that flood risk is not being captured in home values.”
Instead, there may be “localized downsizings” as certain areas develop a stigma after particularly bad storms, explains Ryan D’Amario, a vice president of personal lines property underwriting at insurance analytics firm Verisk. But predicting exactly when and where an extreme weather event is likely to happen is so “broad and wide” that many homeowners are likely to continue with business as usual.
“The storms are happening so diversely in so many different areas of the state,” D’Amario told Business Insider. “The demand will always be present.”
Smith-Frady, the real-estate agent whose Bradenton home flooded, said part of living in Florida is understanding the tradeoff between risk and reward.
“We live in a great place — it’s wonderful,” Smith-Frady said. “We haven’t had a storm surge on this part of the Gulf Coast in over 100 years. It’s easy for generations to forget that you’re susceptible to that. But the reality is that that is the risk that we take by living on the coast.”