Written by: Sierra Perrin Hee
Real estate generates almost 17% of Florida’s GDP, but with increases in tropical storms Florida’s housing market has had to adapt, becoming more reliant on wealthy home buyers (Coren, M. J., et al., 2024). Due to recent hurricanes, especially Milton, less affluent homeowners are beginning to pack up and move from the Sunshine State, while wealthy newcomers are flocking in. As tropical storms and climate change continue to become more detrimental to coastal homes, it appears that the housing market in Florida will rely upon wealthy families, who can both afford to pay for flood insurance and to rebuild their homes when disastrous storms wreak havoc upon them.
According to Zillow’s Home Value index, over the past 5 years, average home prices in Florida have increased by approximately $150,000 (Zillow Home Value Index, 2024). To buy a home on the desired coastal lands of Florida, homeowners have to pay, on average, 50% more today than 5 years ago to purchase the same home. Additionally, the average homeowners insurance policy in Florida is $10,996 annually but is projected to increase by almost $1,000 annually (Tracey, M. D., Table 1, 2024). For homeowners, on top of the increases in home prices, this insurance premium increase is hefty, and selling a home, to lock in the property value gain, appears to be a more prudent decision for less affluent homeowners. Floridian flood insurance has an average price of $792 per year, but can be as much as $3,500 annually in high-risk areas, and only covers “up to $250,000 in damage to the physical structure of [the] home, and up to $100,000” in property damages. Furthermore, the property damage coverage does not cover valuable items such as pools, decks, hot tubs, and fences. Even more crucial, if a house does flood, the National Flood Insurance Program (NFIP) does not pay for additional living expenses if homeowners are forced to move (DePalo, J., 2024). For a less affluent homeowner, these expenses are exorbitant and most likely cannot be overlooked.
Nevertheless, despite all the negative trends in the Florida housing market, it appears people will continue to move south because of the warm, sunny climate. As Carl Hiassen, a Floridian novelist and journalist describes, there are always people who want to move to Florida, because they are optimistic that the Sunshine State will provide them with a great life: one that does not include the need to rebuild their house from a hurricane. Hiaasen continued, “‘but there will be someone else that’s willing to buy that piece of property that’s under six feet of water tonight. There will be someone else willing to fall for that dream’” (Gelles, D., 2024). For many years moving to Florida to spend time on the white sand beaches has been a dream of American homeowners, and for the wealthy this dream appears to persist, even with the dark cloud of destructive tropical storms looming. Homeowners are hopeful that Florida will provide them with the luxury and sunshine that they crave, and when the storms hit they have faith their home will be safe. Frankly, those looking to become Floridians are not thinking about tropical storms and possibly needing to rebuild their home. Instead they’re focused on warmth, beaches, a good job market, no personal income tax, and relatively low property taxes. As migration trend studies have shown, Americans tend to focus on “economic concerns and lifestyle preferences… rather than potential for catastrophe” (Rojanasakul, M., & Popovich, N., 2024). Even though there have been numerous disastrous hurricanes that have hit Florida in recent years, the possibility of a hurricane or tropical storm destroying a home is not a main factor in moving. Instead, the concrete economic concerns, not natural disasters, are what influence home buyers. Florida has continued to add population following Wilma and Katrina, two of the most deadly hurricanes to have hit Florida in the 21st century, and therefore, it appears that Florida’s population will continue to grow as wealthy homeowners move south.
The Floridian economy is reliant upon the belief that the wealthy will continue to move into the state as builders have yet to stop building on high-risk flood zones. Currently La Linda Estates is “being built in a high-risk flood zone on a barrier island near where Milton made landfall” (Eaglesham, J., & Churchill, C., 2024). These builders rely on a continuing pipeline of wealthy home buyers because the less affluent are unable to afford to rebuild these homes. Also, since these homes are in high-risk areas they are likely to face additional storms and once again face the need to be rebuilt. Effectively creating a cycle of never ending resource use and rebuilding that has an increasingly negative effect on an already deteriorating climate. Moreover, “Florida built 77,000 new properties in high-risk flood areas since 2019” (Eaglesham and Churchill, 2024). Builders are hopeful current trends will follow those of hurricanes past, and that wealthy buyers will continue to accept the risk. As a 2006 case study, following both Hurricane Wilma and Katrina, by the National Association of Realtors discovered “the impacted regions continued to draw a high number of new residents, essentially the same as before the hurricanes” (NAR, 2006). Today the trends appear to be similar: those that can afford to live in and move into Florida will continue their migration, ignoring the negative side effects likely to occur from future tropical storms.
Due to recent trends in housing prices and insurance rates, the Florida economy does not seem to be giving up on the idea that homeowners will keep migrating into the Sunshine State as evidenced following recent hurricanes Milton and Helene. Builders are hopeful and continue to build in high-risk areas, and as trends from other recent hurricanes show, homeowners do not seem to have lost hope either. But despite the fact that the Florida housing market continues to be strong, trends do show that the market is adjusting, attracting wealthier homeowners and discouraging the less affluent from remaining in the state. With increases in the number of homes in high-risk flood zones, increasing insurance rates, and increases in the prices of homes, all combined with the increase in risk due to climate change causing more destructive storms, it is unlikely that new homeowners migrating to the sunshine state will not be wealthy.
References
Coren, M. J., Ahmed, N., & Crowe, K. (2024, October 15). Where climate change poses the most and least risk to American homeowners. The Washington Post. https://www.washingtonpost.com/climate-environment/interactive/2024/home-insurance-climate-change-housing-market
DePalo, J. (2024, July 31). How Much is Flood Insurance in Florida?. Property Insurance Coverage Law Blog. https://www.propertyinsurancecoveragelaw.com/blog/how-much-is-flood-insurance-in-florida/
Eaglesham, J., & Churchill, C. (2024, October 16). Storms Be Damned, Florida Keeps Building in High-Risk Areas. The Wall Street Journal. https://www.wsj.com/finance/banking/florida-flood-zones-development-0593cdb9?mod=Searchresults_pos3&page=1
Florida Housing Market. Zillow. (2024, September 19). https://www.zillow.com/home-values/14/fl
Gelles, D. (2024, October 10). Will Climate Change Transform the Florida Dream?. The New York Times. https://www.nytimes.com/2024/10/10/climate/will-climate-change-transform-the-florida-dream.html
National Guard of the United States. (2024). Flooding caused by Hurricane Florence. Activist 360. https://www.activist360.co/2024/01/21/navigating-the-storm-how-climate-change-influences-mortgage-defaults-in-florida/.
Rojanasakul, M., & Popovich, N. (2024, September 30). Where Americans Have Been Moving Into Disaster-Prone Areas. The New York Times. https://www.nytimes.com/interactive/2024/09/30/climate/americans-moving-hurricane-wildfire-risk.html
The Impact of Hurricanes on Housing and Economic Activity: A Case Study for Florida. (2006, April). https://www.nar.realtor/sites/default/files/migration_files/hurricanes-impact-on-housing-d-economic-activity-case-study-florida-2006-04.pdf
Tracey, M. D. (2024, May 20). States Where Home Insurance Costs Are Surging Highest. National Association of REALTORS®. https://www.nar.realtor/magazine/real-estate-news/states-where-home-insurance-costs-are-surging-highest