Maybe its insensitive to say this, but isn't this a REALLY good thing and will save tens of thousands of lives?
How else do you convince people not to build and live in spots that are known to be disaster areas, in a country that has so much space that you can drive somewhere and run out of fuel?
What areas of the US did you have in mind, specifically?
I must point out that much of the available space is marginally suitable,
at best,
for residential communities.
We already have large cities in places that require unsustainable levels of resource consumption to continue existing.
Just considering water: Los Angeles is a desert made green by importing water from hundreds of miles away (and destroying the communities that used to exist near the water sources).
The Colorado River is oversubscribed, and most years never reaches the ocean.
Groundwater sources like the Ogallala Aquifer are depleted.
This doesn't begin to count the effects of sprawl and urbanization on wildlife populations.
> In some coastal U.S. cities, it’s not just the hurricanes and floods putting homes at risk, it’s the cost of insurance itself that’s becoming unsustainable
It is the disasters that are causing the insurance to become unaffordable.
You can go read the financial reports for these insurance companies. They are losing money hand over fist in disaster prone areas. The industry as a whole typically loses money on underwriting home insurance, at best they have a year or two in a decade where they make a point or two in profit.
Even if shelter is or should be fundamental human right. Shelter in specific location subsidized by others is absolutely not one. There is nothing sane stopping making areas with less risks denser. Thus overall saving costs for everyone.
Isn’t homeowners insurance subsidised in the US in some places, especially in high risk areas?
I can‘t find good resources on this - is there a logic behind this beyond pleasing the people that have vested interests in those areas (like owning a home)?
I am both unsurprised and extremely disappointed with the amount of people saying "good, they shouldn't be living there".
Good luck telling that to the family trying to live close to their support network, or the old woman who has to sell her home to go into care, only to find her house is now worth so little she's a couple hundred K in debt.
Paying essentially a 3% tax on your home so you can keep living in a place with depreciating home values[1] is wild. In an ironic way it reflects the financial illiteracy culture (faux rich people who are deep in bad debt) of Miami.
Nailed it, mic drop >>> "reflects the financial illiteracy culture"
However for every Ying there is also a Yang so I too am interested in any factual data based replies or guidance please. And no, I am not looking to short REITs.
Some family members that owned in Florida for a decade sold a few years back after their costs began to balloon while other family members are still looking to move there in the coming years. Some can see what is unfolding, most cannot, yet all will pay given the systems current implementation.
I see many comments along the lines of, "Good, this is how the market should work" as if displacement is a desirable outcome. Reasoning from first principles, the world we want is one in which we have fewer disaster-prone areas, not more. This would mean lower insurance rates, and fewer instances of displacement. This is a symptom of a deeper problem.
One of the ways that rational markets work is by allowing people the results of their choices. Yes, I get that in rare cases the stack of circumstances eliminate many or all choices, but in the main people in America have some of the greatest freedoms. The statisticians are noting where the risks are higher and saying "you can have the coverage if it's worth it to you, but this is what it will cost" and competition in the insurance marketplace pressures the premium towards the average true cost. (sometimes below, because they can invest your premium)
Now, if you know you're an outlier due to lifestyle, hurricane proofing, living ontop of a hill or whatever relates to the main risks of the area, then maybe you're better off not buying it? (iirc mortgage rules don't always allow this?)
Another thing to consider is that a lot of people buy Houses like they do cars. They do not evaluate the TCO, they simply look at the monthly amount (and the smarter ones include taxes, insurance, maintenance)... in a rational market the price of houses in disaster-prone areas would be suppressed by the excess cash-flow required to pay the insurance. Really roughly speaking $50 a month of insurance should remove $5000 from the house purchase price.
Keep letting the market reward those who make rational decisions!
As Bill Engvall said "here's your sign." It's expensive to live in disaster-prone areas. Whether the disasters are due to hurricanes, tornadoes, wildfires, or earthquakes. You are statistically more likely to make a claim, and therefore your premium must reflect that reality.
The rising premiums serve as a brake for continued development in such areas. Not only should it drive the build-out of fewer units, it should also drive the build-out of cheaper units. Building multimillion-dollar homes in disaster-prone areas should be extremely expensive to insure.
While the article refers to Florida and Louisiana, due to increased precipitation density we're seeing more intense flooding happening more frequently in areas that aren't near the coast but are near a river. Many small towns in New England were established near a river for power and transportation. In some cases, they've now been flooded on the same day three years in a row.
These didn't used to be disaster-prone cities, but they are now.
The tinfoil hat part of my brain suspects that jacking insurance rates up is a good way to get people to vacate land so it can be owned by the very wealthy only. Declare the land "too dangerous" to live on, homeowners get priced out because they cant afford the insurance plus mortgage, somebody buys all the land up and magically it gets reclassified as safe. A sort of insurance-based blockbusting. This time though it's nationwide.
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[ 4.1 ms ] story [ 50.9 ms ] threadHow else do you convince people not to build and live in spots that are known to be disaster areas, in a country that has so much space that you can drive somewhere and run out of fuel?
I must point out that much of the available space is marginally suitable, at best, for residential communities. We already have large cities in places that require unsustainable levels of resource consumption to continue existing.
Just considering water: Los Angeles is a desert made green by importing water from hundreds of miles away (and destroying the communities that used to exist near the water sources). The Colorado River is oversubscribed, and most years never reaches the ocean. Groundwater sources like the Ogallala Aquifer are depleted.
This doesn't begin to count the effects of sprawl and urbanization on wildlife populations.
People should not live in disaster prone areas. And if they want to the cost for that should not be socialized.
It is the disasters that are causing the insurance to become unaffordable.
You can go read the financial reports for these insurance companies. They are losing money hand over fist in disaster prone areas. The industry as a whole typically loses money on underwriting home insurance, at best they have a year or two in a decade where they make a point or two in profit.
And they believe that it's happening now.
I can‘t find good resources on this - is there a logic behind this beyond pleasing the people that have vested interests in those areas (like owning a home)?
Does the high cost of insurance not directly follow from the risk of disaster? This is strangely worded.
Good luck telling that to the family trying to live close to their support network, or the old woman who has to sell her home to go into care, only to find her house is now worth so little she's a couple hundred K in debt.
Paying essentially a 3% tax on your home so you can keep living in a place with depreciating home values[1] is wild. In an ironic way it reflects the financial illiteracy culture (faux rich people who are deep in bad debt) of Miami.
[1]https://www.zillow.com/home-values/14/fl/
However for every Ying there is also a Yang so I too am interested in any factual data based replies or guidance please. And no, I am not looking to short REITs.
Some family members that owned in Florida for a decade sold a few years back after their costs began to balloon while other family members are still looking to move there in the coming years. Some can see what is unfolding, most cannot, yet all will pay given the systems current implementation.
Now, if you know you're an outlier due to lifestyle, hurricane proofing, living ontop of a hill or whatever relates to the main risks of the area, then maybe you're better off not buying it? (iirc mortgage rules don't always allow this?)
Another thing to consider is that a lot of people buy Houses like they do cars. They do not evaluate the TCO, they simply look at the monthly amount (and the smarter ones include taxes, insurance, maintenance)... in a rational market the price of houses in disaster-prone areas would be suppressed by the excess cash-flow required to pay the insurance. Really roughly speaking $50 a month of insurance should remove $5000 from the house purchase price.
Keep letting the market reward those who make rational decisions!
The rising premiums serve as a brake for continued development in such areas. Not only should it drive the build-out of fewer units, it should also drive the build-out of cheaper units. Building multimillion-dollar homes in disaster-prone areas should be extremely expensive to insure.
These didn't used to be disaster-prone cities, but they are now.