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Florida Real Estate

 It should be a surprise to no one that real estate prices in Florida are falling.  Despite the governor's effort to thwart any discussions about global warming and its impact on coastal development, the reality of Florida is that it has for years been a poor insurance risk.  The problems pre-date the current administration, and the federal government's disappearance of flood insurance coverage in the 2022 budget has really started to bite.

Although it is an imperfect image of the state, it is famous for being a retirement community.  snowbirds have flocked to the Sunshine State for decades.  In addition, many had getaway condos easily accessible and in perfect weather.  Florida has long been popular from November to April when the weather is perfect.  The bulk of the world's re-insurance market is based in London, and in 2015 it was apparent that the Florida market was a loss maker, and had been for some time.  Reinsurance is a complicated market where the risk can be multi-year, and exiting is not easy, but for a while now, the market price for Florida (and California too) has been unattractive.  So premiums rose dramatically, but again for most Florida-based insurance companies, it took a while for the full impact to become a disaster.  So the big players quit the place.  No major US insurance company remains in Florida.  

The thing with retired people is that they live on a fixed income, and also the thing for people who have invested in a second or third residence for holidays are looking at costs carefully.  Now with the availability of flooding and hurricane insurance becoming a real issue, both these groups are facing the reality that they have to divest.  Prices are falling.

The Florida political class will be looking for the guilty party, they will focus on the Federal Democrats, but that will be difficult because it was the GOP that killed the Federal flood insurance program.  aside from that all of Florida's problems are local.

It will be interesting to see how the Florida senators play that card, although the governor probably doesn't care that much he's not up for re-election until 2026.

Note: I have no particular attachment to RE in Florida, but I cannot think of better sell signals out of the state than the insurance market breakdown.  The inability of politicians to articulate a solution, or at least address the problem in a meaningful way.  A total failure that will lead to a massive exodus.  There was even an article in the WSJ about retiring people buying in Georgia where the flood and hurricane problem is far less problematic.  Overall an interesting failure of government action to find a remedy that screams for a policy solution...Floridians voted massively for the Republican party, which has spent all its energy on legislation against their "woke demons" and yet failed to address a basic public problem.  The worse part is that most voters will continue to vote for these morons!  People always get the government they deserve


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