Experts are left scratching their heads as Miami-Dade County, one of the nation’s hottest real estate markets, grapples with a perplexing paradox: skyrocketing property prices amidst soaring insurance rates.
Despite being deemed the riskiest county for insurance companies by CoreLogic, with projections of substantial property losses due to severe climate change, Miami-Dade’s residential market remains red-hot. While insurance premiums climb to unprecedented heights—reaching an average of $5,919 for single-family homes in the county—homebuyers seemingly remain undeterred.
The ‘Miami paradox’ as dubbed by CoreLogic’s John Rogers, reflects the puzzling dynamic of escalating property values amidst heightened climate risks. With insurers grappling to accurately price climate risk, many have exited the market altogether, exacerbating the situation. Progressive and Farmers Insurance are among the major providers that have pulled out, leaving homeowners to increasingly rely on Citizens Property Insurance, the state-backed insurer of last resort.
Citizens’ enrollment has surged in recent years, reflecting a market in crisis as insurers struggle to manage risk exposure. Yet, homebuyers remain focused on the lifestyle and economic benefits, largely overlooking concerns about climate change impacts.
As the housing market grapples with these challenges, the imperative to address climate risk becomes ever more pressing. With over 39 million homes nationwide facing underpriced policies for climate risk, the need for action is clear. Despite the reluctance to confront the issue head-on, the reality of climate change’s impact on property values looms large.
While concerns about sea-level rise may not be top-of-mind for buyers like those represented by Dina Goldentayer of Douglas Elliman, the broader implications of climate risk cannot be ignored. As Miami-Dade County navigates this delicate balance between booming real estate and mounting climate challenges, the need for proactive solutions becomes increasingly apparent.
