FLORIDA — Another homeowner insurance company, United Property & Casualty Insurance, announced that it would leave Florida and has filed plans with the state to withdraw. Florida’s Office of Insurance Regulation must now determine if the company has failed – if so, it will be the sixth insurance company this year to become insolvent.
According to Mark Friedlander, the Insurance Information Institute spokesperson, the private insurance market in Florida is collapsing. Homeowners are now forced to find new coverage as the pool of insurers willing to write new policies decreases. Additionally, increases in insurance premiums and rising property taxes have forced landlords to increase rent. Homeowners are also seeing higher monthly mortgage payments.
A new analysis by the Institute found that Floridians are paying property insurance premiums nearly three times the national average. The institute lists 13 other home insurers who have announced that they are leaving the Florida market, gone insolvent, or are no longer writing new policies in the state.
Florida has seen tremendous growth as Americans flock to the Sunshine State for better opportunities. In 2020 and 2021, Florida was the number one destination out of all other states, according to data compiled by Move.org. But with an increase in population from other states like New York and California, rent has soared in popular neighborhoods. According to the Wall Street Journal, apartment rental costs in Miami have increased more than 58 percent over the past two years. In some communities, rent has doubled over the last year.
In 2020 and 2021, when the CDC enacted a moratorium on evictions, some landlords didn’t receive rent payments for more than a year.
The National Multifamily Housing Council warns that rent control is ineffective, citing research that shows weighty consequences when the government intervenes in housing markets. Cities like Los Angeles, San Francisco, and New York that have implemented rent control continue to have a severe housing crisis, challenges with homelessness, and a higher cost of living.
STRUGGLE TO KEEP UP
The cost of living is less for people who have moved from New York to Florida. But many Floridians, pillars of their community for decades, struggle to keep up.
Research from Florida International University shows that Lake Worth, in Palm Beach County, has one of the highest cost-to-income ratios, with more than 65 percent of renters paying 30 percent or more of their income toward rent.
This past week in Lake Worth Beach, renters demanded help at a city meeting for unprecedented rent increases. A single mother with four children said she could no longer afford to pay her rent. One man said he would have to choose between keeping a roof over his head and buying groceries.
STATE OF EMERGENCY
Hours after the meeting, Lake Worth Beach city commissioners declared a state of emergency – a legal strategy that may provide measures to control rent. “There is a sensitivity that these are real people with real major suffering because of housing prices and especially rental prices. This is not just the lower end of the income range, where it is probably worse. It goes across a number of income ranges,” city commissioner Christopher McVoy told the Sun Sentinel.
But a spokesperson for Governor DeSantis’ office told the Florida Standard that “those who are quick to insist on a state of emergency to address affordable housing are those who believe that the government can and should solve every problem with the heaviest hand.” Increasing government intervention in housing markets cannot solve complex problems like this – it tends to worsen those problems, according to Bryan Griffin, press secretary for the Executive Office of the Governor.
Recently in both St. Petersburg and Tampa, officials voted against declaring a state of emergency relating to the housing crisis. However, in Orange County, officials voted earlier this month to add a rent control ordinance to the November ballot. The Florida Apartment Association and Florida Realtors have filed complaints against the measure.
INFLATION DRIVING UP COSTS
One of the most significant factors contributing to inflation, and driving up the cost of living in Florida, is federal spending and policy. Congress passed two historic spending bills that have increased inflation nationwide to the highest levels seen in over 40 years. According to the Bureau of Labor Statistics, prices of everyday goods increased 7.9 percent in the past 12 months.
“Governor DeSantis continues to stand against the heavy-handed federal government policies that are causing housing affordability issues. He will not take the same failed approach to address the issue in Florida,” said Griffin. Instead, the governor will continue to distribute federal assistance funds and fully fund affordable housing and housing assistance programs at the state level.
DESANTIS: BUILD MORE
According to DeSantis, there is only one way to stabilize the rental market sustainably, minimizing adverse consequences: build more housing. Accordingly, he has encouraged local governments to consider streamlining housing construction and development in their jurisdictions. He also encourages the construction and development of more housing state-wide, single-family homes and multi-family complexes.
Urban areas of Florida are seeing new construction ramping up post-COVID. According to a University of Central Florida report, about 160,000 single-family housing units started the building phase in 2022. And between 2021 and 2024, Florida’s economy is expected to expand at an average rate of 3.9 percent. Jacksonville, Orlando, and Miami are seeing the most significant increase in construction.
On June 1, the governor launched the Florida Hometown Heroes Housing Program. Floridians in over 50 critical professions can receive assistance to help them purchase their first home. The $100 million program is available to law enforcement officers, firefighters, educators, healthcare professionals, childcare employees, and active military or veterans. The governor also supported $363 million appropriated for affordable and workforce housing in the 2022–2023 budget – the highest total in 15 years.
In July, Charlie Crist announced his proposal to address the housing crisis. The focus of his plan is to prevent large real estate investment firms from buying up available houses and then driving up the rent.
“We’re in an affordability crisis like I’ve never seen,” Crist told the Tampa Bay Times in an interview. Crist said the investment firms are “vultures” that prey on the housing market, renters, and individual homebuyers.
In Crist’s plan, a “housing czar” would help reduce local housing prices. The strategy includes limiting the number of single-family residences a firm could own in specific markets. It would also involve taxing properties purchased by an investor and left vacant. His plan would also increase the real estate documentary stamp tax on any out-of-state transaction by a large investment firm.