FLORIDA'S NEW CONSTRUCTION COULD HELP WITH INSURANCE CRISIS
Insurance for new homes costs less in Florida than for existing homes and could explain why sales in that segment of the market have remained resilient, an economist said, even as properties are staying longer on the overall market.
Read more: Find the Lowest Rates From Top Mortgage Lenders
Homes in Florida are spending more time on the market compared to a year ago amid high mortgage rates. But there are signs that this has hurt prices and demand. The Sunshine State has also been grappling with high insurance costs that are also discouraging buyers from entering the market.
This dynamic has contributed to the tripling of inventory in some parts of the state, according to some analysts, which is making builders anxious. But the new home market business in Florida is still seeing activity as buyers are able to pay less for insurance costs than in the existing homes market.
Read more: Step-by-Step Guide on How to Qualify for a Mortgage
"The rise in inventory in Florida has definitely caused rumblings in the new home industry," Ali Wolf, chief economist at Zonda—which informs, advises and connects housing industry experts—said in a recent interview with ResiClub.
"I attribute builders holding up better in Florida so far to the fact that some sellers are selling for insurance reasons. If someone is looking to buy in Southeast or Southwest Florida, they will find that new homes come with a much lower home insurance bill than buying existing ones."
The average insurance premium for a newly built home will cost homeowners $4,234 for a property built in 2023, which is about half of the price for a home constructed 20 years ago, according to MoneyGeek.
Wolf pointed out that a rise in homes in the market could be because homeowners are increasingly looking to put their properties for sale as a result of the high cost of insurance.
Read more: Tips to Help Sell Your Home for the Highest Price
"Some of the increase in supply comes back to the new laws related to existing condo structures and the fear of getting hit with a large bill to upgrade the building," she told ResiClub.
This is another reason why, for buyers, new homes may prove attractive in Florida.
"For those looking to purchase a home, a new property may feel safer [both financially and structurally] compared to an existing one," Wolf said.
The market in Florida has been struggling with weather-related disruptions sparking high costs of insurance. This week, the state's insurer of last resort recommended a hike in rates for coverage for homeowners across the board. Some companies have left the state, blaming high costs for their departure.
2024-06-21T14:23:28Z dg43tfdfdgfd
