Florida's Condo Cliff

A looming crisis for the state.

A significant part of any real estate assets value is its insurability. No insurance, no value. Homes in areas that will burn or flood will drop in price until the cost of insurance and mortgage is less than the cost of a mortgage in a low risk area.

Back in March ISSUE: Insurance Sector Collapse was the first article here about this phenomenon. You can outlaw the use of the phrase climate change, as Florida has done, but actuaries don’t include rhetoric and “political facts” into their estimates. California is the diametric opposite, but what’s happening here is the same. As summarized in Insurance Sector Collapse Process, the actuaries have spoken, and the insurance carriers are fleeing both states.

I presume everyone has at least some memory of what happened to the Surfside condos in 2021 - 98 dead and a billion in damages.

Legislation in Florida created a law that requires inspection and remediation for any condo facility that is thirty years old. A million units of housing, primarily in the hands of retirees, have become unsalable and will soon be deemed uninhabitable. The desirable locations will sell en masse, the less desirable will crash in value. People have started just walking away from homes they can not afford to repair.

Condo owners are typically older and I’m going to guess that in Florida that means 75% are Republican voters. This is a man made crisis over top of a natural crisis and it will be interesting to see what the reactions are.