The housing market in Florida is undergoing significant stress due to the dual impact of rising flood insurance costs and the increasing frequency of severe weather events. According to Nicholas Gerli of Reventure Consulting, the situation has reached a breaking point in some neighborhoods, forcing many homeowners to put their properties up for sale. One such area is Shore Acres in St. Petersburg, Florida, where “For Sale” signs have become an all-too-common sight.
A Neighborhood in Crisis
In his video, Gerli reports from Shore Acres, highlighting the alarming number of homes for sale in the area. “The number of homes for sale in this ZIP code has gone up by 400% over the last three years,” he explains, noting that the current inventory is the highest it has been in a decade. The spike in listings is directly linked to the skyrocketing cost of flood insurance, which has become unaffordable for many residents.
The Burden of Rising Insurance Costs
Gerli shares the stories of local homeowners who have seen their insurance premiums increase dramatically. “Some of these owners are now paying over $11,000 a year for their insurance,” he notes, compared to just $4,000 five years ago. This financial strain, coupled with the threat of flooding, has left many with no choice but to sell their homes.
The Impact of Climate Change
The increasing frequency of extreme weather events, driven by climate change, is exacerbating the situation in Florida. Gerli points out that neighborhoods like Shore Acres are experiencing flooding at levels never seen before. He recounts how, during Hurricane Idalia in August 2023, about 50% of the homes in Shore Acres were flooded, even though the hurricane did not directly hit St. Petersburg. “45% of the homes in this neighborhood flooded a year ago during Hurricane Idalia,” he emphasizes, illustrating the severe impact on the community.
For many new homeowners in Florida, the risks associated with buying property in flood-prone areas are not fully understood. Gerli describes how people moving from other states, such as New York, are often unprepared for the realities of Florida’s climate. “They weren’t prepared to have their house flooded, their kids lost all their things, all their possessions,” he says, referencing a New York Times article that detailed the traumatic experiences of some of these new residents.
The Dilemma of Selling or Staying
The situation in Shore Acres presents a difficult dilemma for homeowners. Even those who want to move are finding it challenging due to the declining market. Gerli explains, “A lot of people are stuck here; even if they want to move, they can’t.” The combination of high insurance costs, the risk of flooding, and a down market means that selling their homes might result in a financial loss, making relocation difficult.
The Rising Cost of Mitigation
In an attempt to mitigate future flood damage, some homeowners are resorting to expensive measures such as raising their houses. Gerli reports that raising a home in Shore Acres can cost as much as $300,000, a price tag that is out of reach for many residents. “For some of the people who have been in this neighborhood for a long time and maybe don’t have as high an income… you’re not going to spend 300 Grand to raise your house,” he remarks.
A Market in Decline
Gerli highlights the broader implications for the housing market in Florida, noting that the situation in Shore Acres is indicative of a larger trend. He points out that while home prices in the area soared during the pandemic, they are now starting to decline due to the high inventory and the pressures on sellers. “We’re starting to see more sellers really get with reality before the buyers come back into the market,” he says.
The Need for Market Patience
Despite the growing number of homes for sale, Gerli advises potential buyers to exercise patience. “This housing cycle is requiring a lot of patience,” he acknowledges, explaining that while prices are beginning to fall, the market has not yet reached a point where buying is advantageous for most people. The combination of high inflation, mortgage rates, and insurance costs continues to weigh heavily on the market.
“You Don’t Own a Home, You Rent It From The County”
People in the comments shared their thoughts: “I’m 54 and my wife and I are VERY worried about our future, gas and food prices rising daily. We have had our savings dwindle with the cost of living into the stratosphere, and we are finding it impossible to replace them. We can get by, but can’t seem to get ahead. My condolences to anyone retiring in this crisis, 30 years nonstop just for a crooked system to take all you worked for.”
Another person added: “How can you say you own a home if every year you have to pay $20-30k for taxes and insurance or you lose it. You don’t own a home, you rent it from the county.”
A Warning for Homebuyers
As Gerli wraps up his report, he issues a cautionary note to those considering purchasing property in Florida. He urges potential buyers and investors to carefully evaluate the risks associated with flood zones and to monitor market trends closely. “The most important thing you can do as a buyer and investor right now is track the data in your market,” he advises, emphasizing the importance of informed decision-making in these uncertain times.
The situation in Shore Acres serves as a stark reminder of the profound impact that climate change and economic pressures can have on communities. As the effects of rising sea levels and extreme weather events continue to unfold, more neighborhoods in Florida and beyond may find themselves facing similar challenges.
Rising Flood-insurance Costs
What do you think? How do you think climate change will continue to impact the real estate market in coastal areas like Florida? What measures should governments and communities take to protect homeowners in flood-prone areas? As flood insurance costs rise, do you believe more people will be forced to leave their homes, and what could be the long-term social and economic impacts?
See the full video on Reventure Consulting’s YouTube channel for more details here.
