Florida's Housing Market Faces Major Setback As High Insurance Costs And Storm Concerns Drive Buyers Away, Leaving Homeowners Stuck

Anthony Holmes thought he had struck gold when he joined the thousands of Americans flocking to Florida during the pandemic. In 2021, Holmes left Virginia, buying a five-bedroom home in a gated Tampa community for $550,000. After investing another $50,000 in upgrades, he was sure he'd made a sound financial decision.

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Fast forward to today and Holmes cannot sell his house. "I can't unload the thing," Holmes told The Wall Street Journal. "In eight months, I've had zero offers. No one even showed up to the open houses." He’s still stuck with it despite dropping the listing price from $620,000 to $583,900.

It's not just Holmes feeling the squeeze. Across Florida, once-booming housing markets have slowed down dramatically. Parcl Labs reports a 50% increase in housing inventory in cities like Tampa and Orlando, while demand has dropped by at least 10%. Many sellers are slashing prices, with more than half Tampa's homes on the market seeing reductions.

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This is due to a potent mix of skyrocketing mortgage rates, surging insurance premiums and the looming threat of hurricanes. Just two weeks ago, Hurricane Helene caused significant damage on Florida's Western coast. Now, Hurricane Milton is on its way, expected to hit this Wednesday. Florida Gov. Ron DeSantis has already declared a state of emergency, urging residents to prepare for potential evacuations.

The rise in hurricane activity has been the final straw for many Florida homeowners struggling with soaring insurance costs. In some areas, premiums have increased by up to 400%, making Florida one of the most expensive states for home insurance.

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According to the Insurance Information Institute, insurers pass on the costs of frequent natural disasters to homeowners. Holmes, who used to pay $1,700 annually for coverage, now pays more than double after his previous insurer dropped him following Hurricane Idalia.