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Yves here. Our articles on how home insurance is becoming unaffordable and even close to unavailable in some parts of the US, like swathes of Florida and California, have been parochial, since they have been about what is happening in the US, where home insurance is integral to getting a mortgage. So home insurance become pricey and scarce will over time blow back to housing prices. And as more and more parts of the country have prices correct to reflect scarcity of insurance and the cost of insurance (even assuming one can get it) eating more of total housing costs (as in reducing what buyers are able to pay for mortgages) and have some area be denied home insurance entirely, there will be rising losses of what was once wealth (home values) and possibly a rise in defaults (losses to lenders).
The article, by focusing on Florida and flood risk, gives short shrift to wildfire risk. As Europeans and Canadians can attest, areas once thought to be safe have turned out not to be after protracted dry and hot periods. Over the longer term, it’s not clear how long the current model of mortgage finance, which depends on home insurance, will endure in most US markets.
One has to think that this exposure exists in countries where mortgaging to buy homes is common. The financialized US has one of the highest uptakes of home mortgages, but there are other countries where mortgages are mighty popular. This screenshot is from Forbes, and is based on a 2022 OECD report on which countries have the highest percentage of homes owned free and clear. You can see the US is close to the bottom. My guesstimate is that any country with less than 40% of homes owned outright is mighty exposed to climate change > higher cost/scarcer home insurance > difficulties in getting/affording mortgage > major home price correction. Can readers in any of these countries tell us if their pundits or officials have started to worry about this risk?
By Gilbert M. Gaul, a two-time Pulitzer Prize winner and author of the book “The Geography of Risk: Epic Storms, Rising Seas and the Cost of America’s Coasts.” Originally published by Yale Environment 360 and Undark
For decades, >Sanibel Island, one of the most treasured vacation resorts in America, was an insurance agent’s dream. Year after year, the 5,000-odd residents of the barrier island on Florida’s Gulf Coast wrote checks for their home and flood insurance policies, but rarely filed claims. Insurers collected over $10 in premiums for every dollar they paid out, a remarkable return on their business.
Then, in September 2022, Ian, a bruising Category 4 hurricane pushed up to 12 feet of water across the low-lying island, collapsing part of the only causeway on and off Sanibel, flooding thousands of single-family homes and condominiums with brackish water, and forcing some year-round residents into exile for over a year. Two more hurricanes, Helene and Milton, in 2024 added to the island’s misery.
The damage was both staggering and surprising. It had been years since Sanibel experienced a hurricane of any consequence. Officials had also taken steps to reduce their risks, limiting development to a third of the 12-mile-long island and setting aside land for a federal wildlife refuge. Still, Sanibel is only a few feet above sea level and many older homes are at ground level.
“We had so many good years, 30 or 40 years, we were spoiled,” said Daniel Moore Thompson, whose two-bedroom house and gift shop flooded. “And then Ian happened, and it was like we lost our innocence. I basically lost everything except my Jeep and dog.”
In a matter of hours, Sanibel went from being an insurer’s dream to a financial nightmare. The National Flood Insurance Program, or NFIP, which sells most flood policies, was hit with $620 million in claims, a nearly hundredfold increase from the total that it had paid Sanibel homeowners over the previous four decades.
But Sanibel wasn’t the only Southwest Florida community to suffer a dramatic reversal of fortune. Homeowners in Fort Myers Beach, Cape Coral, and Punta Gorda received over $1 billion in flood payouts, records show. Meanwhile, property insurers covering wind and other damages paid billions more, helping to make Ian one of the costliest hurricanes in history.
For insurers, the three hurricanes were a rude awakening. After years of underestimating risks posed by climate-fueled storms, wildfires, and other natural disasters, the industry now faces a perilous future. Old models based on stable climates are being challenged by more frequent, extreme, and damaging events — from searing wildfires in the coastal canyons of California, to hail and torrential rain in the Midwest, to explosive hurricanes such as Ian in Florida, Louisiana, and Texas. Now, as sea levels rise, drenching rain storms swell rivers, and hail the size of baseballs pound roofs and cars, the increased costs are pushing insurers to the limit, upending housing markets, and even reshaping the makeup of some communities.
“The insurance crisis in the U.S. is the canary in the coal mine, and the canary is dead,” said Dave Jones, the insurance commissioner of California from 2011-2018 and now director of the Climate Risk Initiative at the Center for Law, Energy, and Environment at the University of California, Berkeley. During his time as commissioner, wildfires exploded in Paradise and Malibu, resulting in billions in damages. Coupled with the Trump administration’s aggressive moves to roll back climate initiatives, Jones fears: “We are marching toward an uninsurable future in this country and across the globe; marching into the abyss.”
Jones isn’t alone in such dire warnings. Testifying this February before the Senate Banking Committee, Federal Reserve Chairman Jerome Powell predicted that “in 10 or 15 years there are going to be regions of the country where you cannot get a mortgage [because insurance isn’t available].”
Even more recently, the economists and climate analysts Carolyn Kousky, Spencer Glendon, and Barney Schauble raised the idea that the future may be uninsurable. “As natural disasters grow more frequent, extreme, and damaging, more people and businesses are struggling to afford — and even get — insurance,” they wrote in a recent article. “In places of increased climate risk from disasters such as fires and storms, insurance has gone from an afterthought to a source of concern, dismay, and anger.”
The markets for property and flood insurance are already in crisis, and in some high-risk areas, are broken, analysts say. Dozens of insurers in Florida, Louisiana, Texas, and California have collapsed or been declared insolvent following searing wildfires and catastrophic hurricanes. Meanwhile, prominent national insurers, including Progressive, Allstate, and State Farm, have fled high-risk states or scaled back on writing new policies. In one five-year period, 2018-2023, insurers canceled nearly 2 million homeowner’s policies in the face of rising climate risks — over four times the number that would normally be expected in a year. Many of the notices came with little warning or explanation, leaving homeowners scrambling to find new coverage, no longer a given, and likely at a sharply higher price.
Deborah Brown received notice in 2017 that her family homeowner’s policy was being canceled after years with the same insurer. Her home was 10 miles inland, from Fort Lauderdale, Florida, but insurers considered it to be high risk. When she looked for a new policy, she was quoted a figure of $8,000, Brown recalled, double her last policy, and over three times the national average, about $2,300. “That was the straw that broke our back,” Brown said. She and her husband sold their house and are now splitting their time between an RV and their daughter’s home upstate.
Florida and other high-risk coastal states have the highest rates of non-renewals, data prepared by the U.S. Senate Budget Committee show. However, there are signs that the trend — while not as pronounced — is spreading inland to Iowa, Oklahoma, and other states.
“People always question: Is insurance going to break?” said Benjamin Keys, a Wharton School economist who has written extensively about the impacts of climate change on real estate. “Well, it already broke a long time ago. Private insurers don’t want to write in the riskiest areas. The Florida insurance market has been broken for a long time.”
In 1992, after Hurricane Andrew caused billions in damage in southern Florida, and several companies collapsed or stopped writing policies, the state created Citizens Property Insurance Corporation to act as an insurer of last resort. Although never intended to compete with private companies, Citizens has since grown to become one of the largest insurers in Florida, with as many as 1.4 million policies at one point. Concerned about its growing financial exposure in the wake of Ian, Citizens began “depopulating” its rolls and transferring policies back to newer, smaller private insurers that have entered the chaotic Florida market.
Since 2000, Florida has had 36 presidential disaster declarations, with damages in the last seven years exceeding $300 billion.
More than 30 states have followed Florida’s path and created their own so-called FAIR plans to fill gaps in the private market. In California, hundreds of thousands of homeowners flocked to the state plan when insurers canceled their policies or stopped writing insurance in the wake of devastating wildfires. But the state policies do not come cheaply, and analysts worry that the small insurers do not have sufficient reserves and reinsurance to cover catastrophic disasters. In 2023, Louisiana was forced to raise the rates of its FAIR plan by over 60 percent in the wake of back-to-back hurricanes Laura and Ida.
Some analysts believe the federal government may have to step in to prop up the wavering market for home insurance, the way it did decades ago when it created the federal flood insurance program after private insurers abandoned the market. But the federally subsidized flood insurance program has lost billions over the years and currently is about $20 billion in debt to the U.S. Treasury (that’s after the government already forgave $16 billion of its debt). The troubled NFIP recently increased prices, with the average policy expected to double in five years. Tens of thousands of homeowners have canceled their policies in response, and many more are expected to follow.
“I don’t think the story is insurance won’t be available,” said Keys. “I think the question is affordability and what is the price going to be. For wealthy owners, that may not be a deal-breaker. But others will have to bear more of the risk themselves, either out-of-pocket or by taking out higher deductibles.”
Keys and other analysts estimate that the average cost of a homeowner’s policy nationally has risen between 30 to 40 percent in the last five years — more in high-risk states such as Florida, where there are few regulatory caps and the average premium increased by $1,450 between 2020-2023. Overall, Florida is the most expensive state for homeowner’s insurance, with rates up to four times the national average and painfully high deductibles costing homeowner’s thousands of dollars more.
The risks associated with our hotter, wetter world are growing as natural disasters become more damaging. Ten of the 20 largest wildfires in California have occurred in the last five years, including the devastating 2025 L.A. fires, while hurricane damages and flood losses have soared to all-time highs.
Since 2000, Florida has had 36 presidential disaster declarations, with damages from just the last seven years exceeding $300 billion, according to the National Oceanic and Atmospheric Administration. Florida, Louisiana, and Texas alone account for about two-thirds of all hurricane and flood losses.
For example, between 1979-2003, Florida homeowners filed $1.52 billion in flood claims, data show. Then, in 2004, four large hurricanes struck the state, followed by a string of other storms and floods, including Ian and five other major hurricanes. Flood claims have since swelled to $18.9 billion. Most are in coastal counties along the Gulf of Mexico, including Lee County, home to Sanibel Island.
Keys said the rising costs associated with sea level change, hurricanes, and other natural disasters should be sending “a loud and booming signal” to the housing market. “There is a certain portion of the population that has been skeptical of climate risk, but when it hits your pocketbook you take it seriously,” he said.
Potential buyers have begun asking about climate risks and demanding discounts on homes located in coastal floodplains, known as Special Flood Hazard Areas, with a 1 percent annual chance of a 100-year storm. The sharp uptick in the cost of home and flood insurance is also dampening demand for homes, with tens of thousands of houses sitting unsold and some buyers avoiding high-risk areas entirely.
Potential buyers are factoring climate risks into their purchasing decisions, notes Selma Hepp, an economist at the research firm Cotality (formerly CoreLogic). “They’re pricing in insurance premiums, future storms, and the potential for resale challenges,” she said.
The challenges are especially acute in storm-prone Florida, with 1,350 miles of coastline and millions of houses and condominiums perched along shorelines, lagoons, and canals. Now, following three major hurricanes in two years, the housing boom there shows signs of stalling, or even becoming a bubble.
On Sanibel Island, with three hurricanes since 2022, scores of properties have been on the market for months or longer.
“In Fort Myers and Cape Coral, we have 12,000 properties for sale. Five years ago, maybe there would be 30,” real estate agent Susanne Perstad told The Times of London in April. “There’s so much property for sale — maybe five or six houses on every street — and nothing sells. It’s insane.”
Back on Sanibel Island, scores of homes and condominiums have been on the market for months, or longer, and owners are offering discounts up to $100,000 to lure buyers.
During Covid, demand for homes soared across Florida, but especially along the Gulf. “There was so much demand, we ran out of inventory, and you could sell anything for whatever you wanted,” said Eric Pfeifer, who owns a popular real estate agency on Sanibel. The median sales price soared to $1.3 million, but has since dropped to pre-Covid levels, about $830,000. “It was unsustainable,” Pfeifer said. “People weren’t thinking about sea level rise and climate change. In hindsight, it appears unfortunate.”
Thousands of Sanibel homes have been repaired three years after Ian. But a surprising number haven’t been elevated, and with the island less than five feet above sea level, those properties remain vulnerable to future hurricanes and floods. In Ian, older properties, including many at ground level, accounted for about 70 percent of $620 million in flood losses.
Under an NFIP regulation known as the 50 percent rule, if a house is damaged by half or more of its market value, it is required to elevate in order to keep its flood insurance. But some Sanibel homeowners avoided that requirement by requesting new assessments. The new, higher valuations make it less likely damages reach the 50 percent threshold.
Daniel Moore Thompson said he applied for a state grant to help raise his two-bedroom, two-bathroom house located near Blind Pass, where Sanibel merges with Captiva Island. But he was turned down after the state program ran out of money. “It costs $100,000 or $200,000 to elevate on Sanibel. I didn’t have that with all the other costs I had.”
Thompson got a new, higher assessment, which allowed him to stay on the ground for now. But he still plans to elevate. “It just kind of has to wait until I have the money.”
The federal flood program paid him the maximum $250,000 to cover Ian’s flood damage to his house, plus $75,000 for contents. “I still have my same homeowner’s insurance, and it only went up about 30 percent,” he said. “When I heard some of the horror stories from my friends, who had to fight their insurers or had their policies canceled, I was lucky.”
Thompson’s gift shop, Suncatchers, didn’t have flood insurance, and he estimated he lost about $1 million worth of inventory. He has since relocated to an elevated commercial mall on Periwinkle Way.
Even with the challenges, Thompson plans to stay on Sanibel “as long as nature” allows him. “I moved here from Western Pennsylvania. When I saw the nature and the water, I knew this is where I was meant to be. I get up in the morning, walk out my door and fish. I mean who doesn’t want to live by the water?”
Insurance is just one part of the problem – property values (and of course loans made against those values) are the other, perhaps much bigger side from the point of view of national/global financial risk.
Individuals have a surprisingly high level of tolerance for theoretical flood risk – and (perhaps unconsciously), build that into price expectations – there has been a lot of hedonic research on this – there is little doubt that many people will happily live in a flood risk area if there are perceived to be other benefits – being close to a beach, the view, whatever. But of course individuals perception of risk can be very different from actuarial calculations, and this is where any kind of rational assessment breaks down.
It has to be said that even quite sophisticated flood risk models – the type used by insurance companies and mortgage assessors – can themselves be questionable. I’ve seen properties blacklisted for mortgages because of an historic flood which was a genuine ‘one off’ (for example, due to a culvert being blocked), while areas that probably should be identified as high risk have avoided listing on high risk areas due to model limitations. Once climate change really hits us (and we are only at the very beginning of the worst effects), the ‘unknowns’ will cause chaos for property owners and whoever will have to accept the bill – in the end, most likely, governments.
I think we are talking past each other.
In countries where house purchases are substantially funded by mortgages, individual risk tolerance will not determine prices. Mortgages will depend on the availability of insurance, and debt assumption, which reflect insurance costs, will also fall. So prices will fall in high risk areas towards and even to a much lower cash buyer level. And in the US, that has additional knock-on effects because it will reduce assessed values for property tax purposes. Admittedly the local government can simply set rates higher but that won’t happen quickly.
> Admittedly the local government can simply set rates higher but that won’t happen quickly.
> Republican Governor Ron DeSantis said earlier this year that he supports the idea of completely eliminating the state’s property tax… 65 percent of Floridians said they would support a constitutional amendment to significantly reduce or eliminate property taxes.
And Henry George rolls in his grave some more…
That doesn’t seem to be very well thought out. Florida already has no state income tax so how do they propose to generate revenue? $500.00 oranges?
It depends very much on the specifics of the individual market I would guess.
There are lots of cash buyers out there with an appetite for risk. Not far from where I live there is a large apartment development that, for structural reasons, has been blacklisted by mortgage companies for more than a decade. But there is still an active market for its apartments (at a rough estimate, around 20% lower than the going rate). Most are, I would guess cash buyers making an assessment of rental gains and coming to the conclusion that the potential yields are worth the risk.
At a macro level, of course, the impacts would be very serious, especially if insurers simply walk away from large geographic areas rather than make a unit by unit actuarial calculation of risk. I don’t have any insider knowledge of how the major insurers make their calculations, but I’ve often been surprised at how kneejerk and random the individual property assessments I’ve seen can be. The gap in knowledge between an actuary sitting in an office in London and an engineer doing a site assessment can be very wide indeed.
Ireland has almost 2x the level of non-mortgaged houses as the US. Not comparable.
This is exactly my view on the coastal California market. My shorthand: home prices will eventually fall to the level where the market is just cash buyers willing to take the risk that the home is “disposable.” May destroy public schools since bulk of property taxes go to school system.
If the fall in home prices is fast enough, I think that ups the odds of defaults as you mentioned in your intro. At some point the costs of defaulting will be more bearable than the high costs of insurance plus paying on a mortgage that is seriously underwater for a home you may never be able to sell to cover your mortgage.
“It has to be said that even quite sophisticated flood risk models – the type used by insurance companies and mortgage assessors – can themselves be questionable. I’ve seen properties blacklisted for mortgages because of an historic flood which was a genuine ‘one off’ (for example, due to a culvert being blocked), while areas that probably should be identified as high risk have avoided listing on high risk areas due to model limitations.”
Yes, absolutely this…
There really has been a tendency for blanket zoning for flood risks, even in some flood risk mapping by government agencies, (let alone insurance companies) when there are many cases when an individual property by property approach is necessary.
All models are approximations.
I can go back to some case studies of UK siting of Thames estuary London overspill in Kent and Essex in the 70s and 80s where hydrological risks were hopelessly underestimated and uninformed, though data then was less reliable.
I am reminded of a medium rise block of flats in Thamesmead where “Fight Rising Damp” signs were displayed up to the fourth floor.
My own insurer told me that underwriters ‘pool’ domestic flood risk premiums by mutualising through spreading them across all insured properties whether or not they are in high risk zones. The aim seems to be affordability rather than fairness.
As there is a zero flood risk here, (short of the Thwaite Glacier melting in a single season), we have managed to cut our home insurance premium by over 20% simply by excluding the flood risk component.
“In Fort Myers and Cape Coral, we have 12,000 properties for sale. Five years ago, maybe there would be 30,” real estate agent Susanne Perstad told The Times of London in April. “There’s so much property for sale — maybe five or six houses on every street — and nothing sells. It’s insane.”
Having grown up elsewhere along the southeast coast and being very familiar with Sanibel/Captiva Islands and the Fort Myers area, Susanne Perstad has this 180 degrees wrong. It is perfectly sane. The only people who are willing to buy, usually in cash, in such places are those for whom the cost is insignificant, meaning if the next hurricane obliterates the house or condo, they will just shrug their shoulders and stay the winter in their mountain house near Asheville, North Carolina, which is safe from climate change. Oh, wait…
> The median sales price soared to $1.3 million, but has since dropped to pre-Covid levels, about $830,000.
Call me when it’s ten cents on the dollar.
Climate Reanalyzer still hasn’t started connecting dots on the recent Sea Surface Temperatures. It makes more sense if you go through the subset regions. Everywhere is running hotter, except Sub-Polar, and ENSO 3.4, which are below the normal bar, not just recent-normal. Could be La Niña kicking in. Just squirrely.
We are expecting our first named storm “Amy” in the next 24hrs, a trans-Atlantic hurricane tail low, and probably only 75 mph gusts here, though up to 100 mph north of us, but I am sure there will be widespread road and rail closures, with even more landslips on our local trunk road, the A83, at the well named ‘Rest and Be Thankful’ pass, which is regularly shut down these days. Then there may well be widespread flooding across Scotland too… It is already raining heavily here. Locally I expect power cuts (outages). We’ll be okay as we have batteries linked to our PVs, a backup genny, and we plan for these events.
I’m always slightly amused by the translation of climate change risks into concerns regarding housing values in western industrial economies, through insurance concerns, but I am somewhat reassured by the increasing regularity with which this first world anxiety surfaces. At least it means some economists understand that the real world does eventually impinge on their free market financial nirvana. Probably mostly still operating under boiling frog syndrome though.
Florida has always been vulnerable. JK Galbraith highlighted its role in the Wall St crash.
Incidentally the ‘1 percent annual chance of a 100-year storm’ does not mean these events cannot recur in successive years. We have had a flood risk assessment in the UK that identified a ’20yr flood’, to indicate a certain risk level, but this way of expressing flood hazards is widely misunderstood, and areas like the Severn valley have had repeated “20yr floods” in consecutive years. These seriously damaged the UK grain harvest a couple of years ago.
Just for a teeny bit of context, there are actually more important and immediate risks for the 50m people in Bangladesh within 5m of mean river levels, and there are 120m people living in the highly vulnerable Yellow River Basin with immediate existential threats, and then 400m+ Chinese dependent on that river’s water resources. 40%+ of Japan’s population (so 55m people) lives in high risk flood zones and apparently Japan is much more exposed to flood risks than earthquakes and tsunamis.
We all know that growth economics is a ‘shoogly peg’ upon which to hang our future hopes.
In the UK property is so highly overvalued as to have unfortunately closed down access to the housing market for millions of potential owner/occupiers in several of the younger age groups. Steve Keen has done a pretty convincing analysis that the surfeit of cheap mortgages and credit is what caused successive house value spikes since the early 80s, rather than lack of availability on the supply side. More adverse neoliberalism. So …. a ‘market adjustment’ in static or falling property values might be no bad thing for many younger folks currently unable to access the housing market.
There is already a housing crisis in the UK even before any flood risks are considered.
Sadly, some of England’s most interesting cities and densely populated urban areas like York, Hull, Chester, Liverpool, Manchester, almost the entire Severn valley plus the whole of East London and Essex are vulnerable to floods.
The same potential lowering of property values applies to those east coast settlements – Yarmouth, Lowestoft, Felixstowe and most of East Anglia is exposed to coastal erosion and retreat. Storms in the southern North Sea already cause annual cliff retreat of up to 2m in exposed East Anglia and even 10m in some parts of Norfolk.
However, the prospect of economic crashes, Minsky moment or ‘exogenous shock’ is probably a more immediate threat to capital values in terms of the economic cycle.
Murphy has blogged on this recently. He lives in an area that is very low lying and susceptible to increased flood risks, so is personally exposed, but the piece is somewhat hyperbolic regarding London’s immediate vulnerability as the Thames Barrage should perform okay until 2070, with present upgrades. It’s already well known that more frequent closures have been needed to cope with current trends. Dunno if a 21stC equivalent of the 1953 scale tidal surge is manageable though….especially downstream in the Thames estuary.
In England alone some 4.6m households are supposedly vulnerable to flooding and are likely to have reduced or unobtainable flood risk insurance now or will in future, but I think this is an underestimate and a more accurate figure is closer to 7.5m – so 25% of all domestic properties. Insurance agents are not hydrologists.
But then some 6m UK households do not have possessions insurance cover, with the highest risks being carried in low income households. The highest immediate risk for most people (as it includes the private rented sector) is loss of possessions and the total disruption to their everyday life, rather than irreparable physical damage to property, though domestic electrics and drainage services are always vulnerable, and the UK is desperately short of sparkies.
Though it is not just flooding, as alternating higher and/or lower water tables create another subsidence risk on clay subsoils. Thankfully, we don’t have permafrost in the UK – another huge risk globally.
Lower capital values for properties in vulnerable zones are not really the crucial metric for climate change impacts: but are currently estimated as -8% in the UK (and a max -30% in the highest flood risk zones). We’ve experienced collapse and low housing values in old industrial areas for decades, whether from economic abandonment or physical causes – like exposure to subsidence risks from former underground workings.
Cynically – climate change is an economic growth positive – it is almost that the more damage there is the better, as that is the spur to both building new infrastructure as well as replacement consumer goods. All disasters – war, storms, flooding, and most forms of death and destruction, at least short of Black Death scale, create new investment opportunities, and hence economic growth.
In Scotland SEPA (Scottish Environmental Protection Agency) are publishing assessments of increased flood risk and coastal inundation up to 2100 that show an increase of about 65% in high intensity rainfall events across the whole of Scotland, with consequent increase in flood risks.
All new development in Scotland is supposed to be subject to a somewhat rule of thumb evaluation of needing to be 3m+ above current flood or tidal surge levels, including in coastal zones.
SEPA now project sea level rise impacts now at 800-900mm by 2100 across most of Scotland, (and over a metre in Shetland). As far as I can see this must include increased surge tide risks as the current average rate of sea level rise for the west of Scotland is 3mm pa. Locally our surge tides from deep low pressure systems already involve an elevation of 1.0 to 1.5m. I’d guess Floridans are in a worse position.
All this assumes no (or very limited) increases in mitigation and adaptation measures, which is probably a fair assumption given the la-la land approach of the British government. They are incredibly short termist, they defer on risk assessments, and Labour cut their planned climate change amelioration and adaptation programmes in government as it’s been an easy target for Reeves.
This institutional failure is inbuilt within neoliberal mindsets. – and especially the UK Treasury, who should all have compulsory applied hydrology training IMO. Add current and intensely nihilistic attitudes of free market, small state dogmatism and you have all the preconditions for regular failure in environmental management, let alone disaster management.
> Cynically – climate change is an economic growth positive – it is almost that the more damage there is the better, as that is the spur to both building new infrastructure as well as replacement consumer goods.
The dystopian abandoned neighborhoods of New Orleans are a case against. As are rebuilding rates in the California wildfire zones. Two frames against the perspective implicit in your paragraph:
: Embodied energy and infrastructure decay: the total energy needed, from raw material to organizational capacity, still does not necessarily replace a regressed system. An example is wood, where hardwoods are both absolutely rarer, and even when available, not as dense as wood grown with less carbon dioxide.
: Amortization and alternatives: at least around here, bubbles are soaking up capital, and every day our less-rich consumers are less able to repay loans. Debts that can’t be paid, won’t be paid.
From 2007: Blaming climate change, government abandons coastal defense in England
Sadly, there was no irony font.
You omitted :-
“All disasters – war, storms, flooding, and most forms of death and destruction, at least short of Black Death scale, create new investment opportunities, and hence economic growth.”
My views on GDP growth have very long been that it is a destructive chimera, as I come from an environmental and humanist perspective, not a mainstream economic consensus.
Even here in the UK we have got to know how shitty post Katrina New Orleans regeneration has been, just as post industrial Motown has abandoned the people there, and people in Flint have been left to die. Then try Bhopal ….
Yet disasters are great for ruling and corporate elites…. that was my intentional irony.
I’m concerned that the “market adjustment” will be a market moving to cash only transactions. Pretty sure this would not make it easier for younger folks to buy a house.
D’y know until I just read your post about Amy, I didn’t know it was about to attack our brethren in Scotland (he says writing from SW London).
Quick check on BBC, ten first stories are about some attack and this terrible ting called antisemitism. No hurricane, nevermind the Scots.
No wonder people in U.K. have absolutely no idea about reality of climate change or indeed the much more sinister change to their natural and cultural and historical environment.
BTW, although my house (Kingston) is only about 3m above Thames mean level, I am taking a view that we are still okay as far as flooding goes. I am not yet running away. The reason is the vast expanse of Bushy Park on the other side of the river and that is an obvious compensation area.
On the other hand, lots of new buildings in Shepperton and more up river there, are being built “elevated” on piles. Think about it, the cost difference is not detrimental, between mass concrete fill of a trench dig versus 10 or 20 shallow piles with ground beams. One offers a failsafe measure against flooding, the other one, not so. Duh.
In any event, sooner or later, insurance companies will stop offering cover based on postcode, so only cash buyers non concerned about insurance will be buying in sexy areas.
I am presently much more affected by the council’s wild racking up the property rates to cover for their wild programs, none of which is designed to be helping the natives. Ah well.
I imagine floating turds and e-coli are a higher risk than flooding for you, given Thames Water’s pollution record, and that you are above Teddington so non tidal..
London clay has pretty low loading capacity so piling and ground beams are not going to be much more costly than conventional substructures, but more complianrt with insurers’ requirements. Seems to be some intent there by the EA to work towards adaptation to future potential risks.
A 2” x 4” x 8’ piece of lumber didn’t have control of where the house it resides is located, but the person who chose to build there did, especially if they don’t want to wear a winter coat.
Accountant Richard Murphy has produced a decent video on this and how the lack of insurance cover affects banks and mortgage lenders..
https://youtu.be/DaM3c5ybj-w
Maybe the problem is that Florida real estate is the square peg in the round hole promising luxurious mansionettes in a region where shacks on stilts are more appropriate. In a past, more practical era people understood this about coastal property and also fewer had the money to go deluxe in the former swamp region.
It’s a somewhat similar situation in our nearby NC mountains and last week PBS Frontline did a show about how many Helene struck property owners are building back to the same standard as before. But a hurricane in our Blue Ridge was truly freakish whereas in Florida it has always been normal including before AGW concerns. Perhaps it’s really Hurricane FIRE economy that is striking the sunshine/hurricane state.
NC is an important example to me, because the mountains had been touted as one of the best places to weather climate change. Like that town in British Columbia that unexpectedly spontaneously combusted a couple of years back. Past returns most definitely don’t predict future performance. Another reason to look to make smaller real estate “bets.”
Lytton burned four years ago, and the mayor just got her home rebuilt. It’s incredible how long it takes to remediate a burned out townsite to the point they’ll allow you to start building. In the meantime, the cost of rebuilding balloons past what the insurance company determined the payout would be. And Lytton still has fires on all sides every year.
Lytton was the first, but Canada is loosing two or three towns a year to now.
“Most are in coastal counties along the Gulf of Mexico, including Lee County, home to Sanibel Island.”
Glad to see the author hanging on to some sense.
Once upon a time a six-year-old became President of the USA. One day, while eating hamburgers and posting on social media, he had an inspiration. Rename the Gulf of Mexico! And so it was. The Gulf of Mexico became the Gulf of America.
The next morning he had a temper tantrum about, well, something. He completely forgot his “inspiration”. And so it wasn’t. The name “Gulf of Mexico” was retained and the people who liked it lived happily ever after.
One of the sideffects of the high home insurance premiums and high mortgage rates double whammy is that it has piled sand into the wheels of the. housing market – this year probably only around 4 million existing single-family homes and about 800,000 new homes will be transacted. Twenty years ago the corresponding figures were 6 million and 1.2 million. Mind you, the number of households has increased significantly as you can imagine. A knock-on effect has been to adversely impact the mobility of labor within the United States, one of the most geographically mobile populations in the world, and all that implies for labor market efficiency, inequality across regions etc…
When only 36% of burnt out homes get rebuilt in Cali over a 5 year period, its a testament to almost 2/3rds of the rest of them lying fallow.
If a wildfire was to take out our mountain community of approx 110 private cabins, I’d guess that a dozen of them would be rebuilt within a few years, thanks to connections with a contractor in the family more than likely.
To ask a regular Joe contractor from Visalia to drive 3 hours each way to work, including 698 significant turns in 25 miles of ascending nearly 7,000 feet, is just not gonna happen.
While I don’t expect my insurance company to FedEx me a check for what the cabin was insured for a few days after the malady, I’d have a strong inclination to not rebuild.
By the time it got rebuilt i’d be in my 70’s, were I to go that course.
At least 1/3rd of cabin owners in Mineral King have no insurance…
I get the logic from the home owner’s point of view, but not from the assessor’s. First, I’m guessing what’s being re-assessed is the market value of the house. Second, I’m guessing the home owner has to get the re-assessment before the home gets flood damaged. But what I’m having trouble guessing is why the assessor would raise the value of a home sited in an area of serious and increasing flood risk. Also, what about property taxes? The assessment fights I’m more familiar with involve home owners suing to get lower assessments to avoid having to pay higher property taxes. Does Florida not do that kind of thing?