This Will Be The ‘No. 1 Housing Affordability Issue’ For Americans — And Florida Especially Will Have ‘Huge Problems’

There’s ongoing debate about how to address America’s housing crisis, with discussions often focusing on issues like mortgage rates, zoning laws, immigration, and construction.

However, billionaire entrepreneur and investor Mark Cuban believes a critical factor is being overlooked by the public.

In a recent Bluesky post, Cuban stated, “Home insurance in areas hit by recurring disasters will become the top housing affordability issue over the next four years, potentially extending into the midterms. This will be a bigger issue than interest rates, particularly in Florida, which will face severe challenges.”

Here’s why home insurance could become a major concern for the national housing market in the coming years.

The Home Insurance Crisis

Home insurance premiums have skyrocketed, mainly due to two primary factors: inflation and climate change. The costs of labor and building materials have surged since the pandemic. While lumber prices have stabilized, the National Association of Home Builders reports that materials like drywall, concrete, and steel remain costly.

For those with replacement cost insurance policies, the cost to replace a home can be much higher now, even before factoring in depreciation. This increased risk is reflected in insurance premiums.

Additionally, homes are becoming more vulnerable to damage due to climate change. With severe floods, wildfires, and hurricanes becoming more frequent, insurance companies are forced to adjust their underwriting practices. As a result, home insurance premiums have increased at a rate 40% faster than inflation between 2017 and 2022, according to the Consumer Federation of America (CFA).

Major insurers like Farmers and Progressive have reduced their coverage or completely pulled out of high-risk areas, such as Florida. In fact, CFA data shows that from 2018 to 2022, 10% of Florida homeowners went without property insurance.

Homeowners and potential buyers need to be aware of the risks of not having proper coverage and should plan for the rising cost of insurance.

Three Ways to Protect Yourself

  1. Evaluate Climate Risk: If you’re in the process of buying property, consider the climate risks in the area. Redfin offers a climate risk score, while the Federal Emergency Management Agency (FEMA) provides flood maps to help you assess potential threats.
  2. Invest in Resilience Measures: If you already own a high-risk property, consider reinforcing your home. Installing shutters, strengthening roofs, elevating structures in flood-prone areas, and using fire-resistant materials can help reduce your premiums, especially in states like Florida.
  3. Explore State-Backed Insurance: If you can’t afford private insurance, research state-backed options like California’s FAIR Plan or Florida’s Citizens Property Insurance Corporation. These programs may serve as your last resort if you’re unable to secure coverage through traditional insurers.

 

Source: MSN