High Insurance Costs Hurting Coastal Real Estate Sales

After the hurricanes of the past few years, the insurance companies have significantly increased the insurance costs for homeowners living in coastal regions of the southeastern United States. These insurance increases have had a factor in slowing down the housing boom along coastal Florida, Georgia, South and North Carolinas.
If you think about it, it makes good sense. Prices increased in these areas during the speculation boom, then the insurance companies took a big hit with the hurricanes in the south in 2004 and 2005 and either jacked up their rates significantly or got out of the market altogether. The example following this shows insurance rates for a home 2 miles from the ocean going from $500 to $3,900 in a year.
That is like a nearly $300 jump in the monthly cost of ownership for a potential buyer. Or put another way, the increased insurance costs prices many out of the market, pushes many fixed income homeowners out of the market, and creates a change in dynamics that hurts the homeowners opportunity to sell.
Now I am not coming out against the insurance increases. It is a free market and the insurance companies are not there to throw money away, and if they price the market too high, competitors will come in and fill the void. But in this period there are many people getting squeezed and a slow market limits their options of getting out.
The brokers spoke to a House subcommittee yesterday that is studying ways to bring rates down.The brokers say higher insurance rates also could lead to higher hotel costs, keeping visitors away. They say it also could stop a promising trend of retirees with money moving to the coast.One bill the subcommittee is studying would extend the state’s wind insurance pool from a narrow coastal strip to all of Horry County. A second bill would extend the insurance pool to all coastal counties.The pool is a state-run service.Ray Hester says insurance on his Garden City condominium two miles from the ocean increased from 500 dollars to 39-hundred dollars. via foxcarolina.com
Tags: hurricane, coastal+real+estate

High Insurance Costs Hurting Coastal Real Estate Sales 2008-07-25T01:57:00-07:00 Rating: 4.5 Diposkan Oleh: Merlyn Rosell