{"id":18079,"date":"2021-04-25T11:23:47","date_gmt":"2021-04-25T18:23:47","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=18079"},"modified":"2021-04-25T11:23:47","modified_gmt":"2021-04-25T18:23:47","slug":"how-to-fix-florida-homeowners-insurance-costs","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/18079\/how-to-fix-florida-homeowners-insurance-costs\/","title":{"rendered":"How To Fix Florida Homeowner’s Insurance Costs"},"content":{"rendered":"

This morning, The Wall Street Journal<\/em> sounded the alarm<\/a> about the ticking time bomb in Florida real estate.\u00a0 It’s behind a paywall but I will try to highlight some key points for you:<\/p>\n

1- Florida homeowner insurance premiums are increasing by a double-digit percentage
\n2- Insurance companies are withdrawing from Florida market because of catastrophic costs (hurricanes, etc)
\n3- Republicans in the Florida Legislature want to solve the problem with tort reform
\n4- Democrats in the Florida Legislature don’t want to remove ability to litigate
\n5- Neither address the fact that beachfront property insurance is heavily subsidized by taxpayers<\/a><\/p>\n

Why would this arrest or reverse the Florida real estate boom?<\/strong>\u00a0 While there has certainly been an increase in all-cash transactions, most properties in Florida are purchased with financing.\u00a0 Mortgage companies will require certain property insurance coverage as a condition of approval and underwrite new loans with those (increased) costs analyzed.\u00a0 Let me break that down for you:<\/p>\n

Let’s consider a median-priced, single-family home in Pinellas County FL, selling for $295,000.\u00a0 Someone could buy that home, with an FHA loan with a 3.6% APR, with $18,000 for a down payment and closing costs.\u00a0 The monthly payment would be about $1750.\u00a0 A family with the Pinellas County median household income of $5000\/month can afford that with a 35% housing ratio.<\/p>\n

Now, let’s double the homeowners insurance, from $150\/mo to $300\/mo and add .5 % to the mortgage annual percentage rate.\u00a0 The monthly payment jumps to just under $2000, and increases the housing ratio to 40%.\u00a0 Unless the median family income jumps to $69,000, there will be less buyers for the home, currently priced at $295,000.\u00a0 If incomes are stagnant, the higher mortgage rate (likely) and the doubling of the homeowners insurance costs will drive the price down to $265,000.<\/p>\n

A drop in prices may be unlikely because of the nationwide supply\/demand imbalance but it’s likely that Florida property prices may flatten for a few years.<\/strong><\/p>\n

What’s the solution?\u00a0 \u00a0More market,\u00a0 less government..<\/strong><\/p>\n

Let’s start here; do away with the National Flood Insurance Program.\u00a0 \u00a0 If we can’t “close it”, seriously reform it<\/a>.\u00a0 NFIP is a wealth transfer from working-class homeowners to upper middle-class beachfront Read more<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

This morning, The Wall Street Journal sounded the alarm about the ticking time bomb in Florida real estate.\u00a0 It’s behind a paywall but I will try to highlight some key points for you: 1- Florida homeowner insurance premiums are increasing by a double-digit percentage 2- Insurance companies are withdrawing from Florida market because of catastrophic […]<\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,5],"tags":[],"class_list":{"0":"post-18079","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-investment","7":"category-real-estate","9":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":2512,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2512\/tuition-is-expensive-at-the-school-of-hard-knocks\/","url_meta":{"origin":18079,"position":0},"title":"Tuition Is Expensive At The School Of Hard Knocks","author":"Doug Quance","date":"January 18, 2008","format":false,"excerpt":"Another Episode Of \"It Doesn't Pay To Be A Cheap Bastard\" In times like these, real estate investors often search for the corners to be cut. 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A\u2026","rel":"","context":"In "Group Therapy"","block_context":{"text":"Group Therapy","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/group-therapy\/"},"img":{"alt_text":"Ya think it's easy?","src":"https:\/\/i0.wp.com\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-content\/uploads\/2020\/08\/BHBNewTopImage-300x225.jpg?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":16834,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/16834\/vacation-rental-investing-perdido-key-fl-purple-parrot\/","url_meta":{"origin":18079,"position":2},"title":"Vacation Rental Investing: Perdido Key, FL– Purple Parrot","author":"Brian Brady","date":"September 2, 2020","format":false,"excerpt":"How about a vacation property, on Perdido Key, Pensacola, Florida, which cash-flows with just 25% down payment? This Realtor-listed property sold for $238,000 in November of 2019 and this FSBO sold for $242,500, two weeks ago.\u00a0 Both properties are 2 BR 2.5 bath bungalows and are in the Purple Parrot\u2026","rel":"","context":"In "Investment"","block_context":{"text":"Investment","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/investment\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-content\/uploads\/2020\/09\/purple-parrot.jpg?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":13904,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/13904\/im-back-ready-to-entertain-my-fellow-bloodhounds-again\/","url_meta":{"origin":18079,"position":3},"title":"I’m Back – ready to entertain my fellow bloodhounds again","author":"Robert Worthington","date":"January 5, 2011","format":false,"excerpt":"I've\u00a0 been absent for a bit.\u00a0 2010 was the year I decided to move my life and business from Wisconsin to Florida.\u00a0 Bascially, I was tired of selling homes for $125k, tired of freezing cold winters, and tired of not living the dream.\u00a0 I'd always dreamed of buying a\u00a0retirement\u00a0 home\u2026","rel":"","context":"In "General"","block_context":{"text":"General","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/general\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":16288,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/16288\/has-your-town-pissed-away-a-fortune-on-the-so-called-creative-class-bad-news-from-richard-florida-on-close-inspection-talent-clustering-provides-little-in-the-way-of-trickle-down-benef\/","url_meta":{"origin":18079,"position":4},"title":"Has your town pissed away a fortune on the so-called ‘creative class’? 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