Condo owners in Florida who are hoping to unload their units are now slashing the prices of their properties in hopes of attracting buyers amid skyrocketing insurance costs in the state.
The prices of condo units have plummeted in some major Florida cities. In Jacksonville, the prices of condo units for sale fell by as much as 7% to $254,000. In Miami, prices were down 3% to an average of $385,000.
Despite falling prices, condo owners are struggling to sell their properties. Sales declined by 27% in Jacksonville and 9% in Miami, according to new data from real-estate listings site Redfin.
While rising home prices, property taxes, and mortgage rates play a role in the struggle to sell properties in the Sunshine State, the rising cost of insurance is also worsening the situation.
Florida's Insurance Crisis
The rising cost of insurance has long been a problem in Florida, where average insurance premiums cost about $6,000 a year. That is more than triple the national average and about three times more than the insurance premiums Florida homeowners paid in 2018, per the Wall Street Journal.
The soaring insurance premiums are still escalating at a rapid pace. In Cape Cod, for example, flood insurance more than doubled in a year from $1,800 to $4,800.
An increase in weather-related events played an important role in the rising insurance costs. United Property and Casualty, a Florida insurance company in liquidation, wrote that 41% of the 292 hurricanes that hit the U.S. between 1851 and 2018 also hit Florida. Of those storms, 37 were rated Category 3 or higher.
What's more, more than a dozen insurance companies have pulled out of the state, including Farmers Insurance, American Capital Assurance Corporation, Avatar Property and Casualty Insurance Company, and FedNat Insurance Company, among 11 others.
In 2022, Florida led the nation in the number of homeowners' insurance-related litigations, making up 79% of all lawsuits across the country while accounting for just 9% of the total claims.
Between 2017 and 2021, Florida insurers paid out $51 billion over 10 years. At least 71% of that total went to attorney's fees while only 8% went to claimants, per data from the Florida Office of Insurance Regulation.
