Surging homeowners insurance costs add to Floridians' affordability woes

Spiking costs causing further headaches for residents of the state

Surging homeowners insurance costs add to Floridians' affordability woes

With housing affordability already a huge issue for many homeowners and would-be buyers throughout the country, Florida residents are grappling with another burden on that front: mounting homeowners insurance costs across the state.

A Redfin report in April showed 70% of Florida homeowners had experienced a rise in insurance costs or some change in coverage during the 12 months prior, well above the 51% who reported that trend in California and 44.6% of homeowners across the US.

It arrives amid growing concern over insurers pulling out of Florida and California over the rising risk of natural disasters, with 11 property insurers having recently liquidated in Florida, and California seeing insurers take a cautious approach to the market.

While Kris Radermacher (pictured top), broker owner and loan officer with K2K Mortgage in Florida has seen a “good mix” of mortgage applicants from inside and outside the state, she underlined those spiraling insurance costs as a major hurdle facing prospective buyers.

“What I do feel a lot of clients are having a struggle with right now is Florida insurance and taxes. We pay a lot,” she said. “Florida’s just gotten a little crazy, outrageous – now they’re also demanding new roofs within a certain amount of time and so forth.

“So it is making it a little bit harder because a lot of our homes in Florida have these crazy low tax bills because they’ve been owned for a really long time… when I’m showing the new payments to the client, they’re really starting to struggle with it.”

A tax bill could see increases in the thousands of dollars, Radermacher said, with similarly eyewatering jumps in insurance costs.

Is relief on the way for Florida homeowners?

Lawmakers for the state have recently tabled an insurance relief act in Congress which would give homeowners an insurance premium deduction from gross income rather than take-home pay, helping them absorb the shock of higher costs.

Those proposed changes won’t come into effect immediately – but the state’s governor Ron DeSantis included a specific tax break in a $1-billion relief package, inked in May, which would see a waive on all insurance premium-related taxes for homeowners and flood insurance policies for a full year.

For now, though, Radermacher said she’s seeing some clients decide to leave the state because they’re no longer able to afford the homes they purchased during the COVID-19 pandemic.

Is the American Dream changing?

She called for some would-be buyers to reassess their preparedness to jump into a home purchase straight away, cautioning that it could turn badly if not planned meticulously and timed appropriately.

“I think the idea of the American Dream has been kind of bastardized,” she said. “It’s not really meant for everybody at that exact moment. It’s obtainable – but sometimes you really have to sit down and figure out when that move is for you.

“I think we kind of gave this notion over the last couple of years that anybody can have a house anytime, and that’s not really correct.”

Radermacher said a dangerous assumption is that homebuying will always be as accessible as it was during the COVID-19 pandemic, and added that would-be buyers needed to think carefully before deciding to take the plunge.

“I think the reality is coming back to what our parents dealt with: they knew they wanted to buy a home, but they put a plan together to figure it out,” she said. “It’s not that they just woke up on Monday and said, ‘I’m buying a house.’ And I think a lot of the younger generation has that idea because that’s what COVID gave them.”

That’s where loan officers can play a more important role than ever, according to Radermacher. Helping younger Americans map out a plan to achieve that homeownership dream is one way of staying busy and making sure business keeps coming in even in a down market.

“I think it’s just about educating and truly explaining to people and helping them focus on how to make that plan if it’s not today,” she said. “We panic because we’re not making the same money. I think a lot of Los are dropping that opportunity to show people how they can get there, and staying in touch with them to keep them motivated to stay on the path.”

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