September 2023

Wind gets all the headlines but water — in the form of surge — can cause the most damage. Florida, for the last 50 years and more, has been a magnet for retirees for one major reason — its climate. But now the very thing that drove them there is driving them crazy with dramatically higher insurance premiums — if they can find an insurance company to cover them. That, and more, in the September issue of Home On The Course.

Climate Change or Not, Climate’s Consequences are Real

In the early 1950s, my Grandpa Max retired from his ownership of a Bronx, NY, parking garage and he and my Nana, Jennie, moved to their new home and new life in Miami Beach.  The best feature of their modest house, which was located miles from the ocean, was a canal running through the backyard.  As a five-year-old, I snagged a couple of eels from that canal with a fishing pole and drop line. Max and Jennie wound up making a very nice retirement life for themselves in Miami Beach over the next three decades. 

Like northeast seniors today who have enough resources to move after retirement, the biggest lure for my grandparents was Florida’s climate, specifically temperatures generally in the 70s during winter.  How ironic that climate issues in Florida could send other peoples’ grandparents in a different direction these days.

Florida is not having a good decade, weather-wise, and the news media has not been kind.  (As I write this, Hurricane Idalia has just battered the “Big Bend” coastal area of Florida.)  Hurricane-level winds make the biggest headlines, but it is water, especially in coastal areas, whose devastating consequences last longer.  Television scenes of Fort Myers Beach in the aftermath of Hurricane Ian were apocalyptic.  Winds, which reached 150 mph, grabbed most of the headlines but the accompanying flooding was every bit as damaging.  A 15-foot storm surge can bring down a house as easily as 150 MPH winds; the combination of the two is many more magnitudes devastating. 

But flooding is not easily remediated, and if a home survives the wind, it likely will not survive the punishing 15-foot wall of water.  In Fort Myers Beach, population 6,000, the storm surge took a large part of one homeowner’s house and deposited it three blocks away.  That owner, thinking about his neighbor’s problems as well as his own, told the local NPR station, “You can’t start to rebuild when you’ve got someone else’s house in your yard.”

Eight months after Ian, life is not close to normal yet in Fort Myers Beach, although a supermarket has reopened and a restaurant as well.  But the town council is forced to hold its meetings in a makeshift building, the town hall having been wiped away by the storm.  And a local resort that was severely damaged and whose business is a major benefit to the local economy won’t reopen until late this year, more than 12 months after the storm.

“Anybody that thinks [it won’t take years to recover] is just lying to themselves,” one local restaurant owner and resident told the NPR station.

The prevalence of strong hurricanes the last few years and the follow-on consequences have spooked insurance companies in the Sunshine State. Florida today has the dubious distinction of the highest average annual home insurance premiums in the nation, at $6,000, according to the Insurance Information Institute.  That is an increase of 42% in just the last year and about four times the national average.  Rates in Florida had already risen by as much as 30% in 2022.  And reinsurance companies, to whom the property insurers sell many policies to reduce their risk, are also increasing their prices.

It is little wonder then that property insurance companies in Florida have either gone bankrupt or decided to stop selling policies in the state.  Since the beginning of 2022, 15 insurers have left the state and another seven were declared insolvent.  State government responded by creating its own “insurer of last resort” to cover those citizens of the state who have no private-market options.  The insured pay their premiums to the state agency and, today, Florida itself is the largest single insurance provider in the state.  But what if another devastating storm like Ian should generate so many claims that it exhausts the state insurance agency’s reserves?  You guessed it; the state’s taxpayers would be on the hook for billions of dollars.

The insurance situation in Florida isn’t just affecting the retirees who make up a majority of the state’s population.  My son and his wife, in their 30s and with a young child, own their first house in Vero Beach.  They are a good five miles from the ocean and their neighborhood has no record of significant hurricane damage.  Last year, however, their property insurer left the state and this year their new insurance company charged them 35% more than they were paying last year. 

Their situation begs the question: How will young people be able to afford to live in Florida if insurance rates are likely to continue to skyrocket?  And one can ask the same question about retirees, especially those on fixed or limited incomes.

The storm surge from Hurricane Ian lifted wooden docks near the ocean across the marsh to Pawleys Plantation Golf Course, a half-mile away.

Insurance is not just a Florida problem.  Up and down the east coast, insurance companies are raising premiums.  For the condo my wife and I own in Pawleys Island, SC, about ¾ mile from the Atlantic Ocean across a wide marsh that tends to slow down the winds from Atlantic hurricanes, our HOA’s 2023 budget for building insurance – to protect the structural integrity of the association’s eight buildings -- rose 32%.  Flood insurance, provided by FEMA, which we pay for directly, rose 11%; the flood insurance covers losses from flooding not covered by the HOA’s building insurance.  Last year, after Hurricane Ian crossed Florida and entered the Atlantic Ocean, Pawleys Island was close to the storm’s re-entry point, with winds of almost 100 mph.  Ian’s storm surge was estimated at five-to-seven feet yet picked up some of the boat docks on the ocean side of the marsh and deposited them on a few holes of the Pawleys Plantation golf course.  (One of those docks still had a boat attached to it.)  Although our condo is not adjacent to the marsh and suffered no wind or flood damage at all from Ian, it is considered nevertheless to be in a flood zone.

Eternal pessimists might ask the eternal weather question:  Is it really safe anywhere?  It is a fair question.  In mid-August, a potentially devastating storm bore down on southern California, and San Diego, generally considered as having the best year-round weather in the nation, was directly in its path.  (The San Diego Padres baseball club postponed a game two days in advance because of the impending storm.)  I know from prior research that locations along the Carolinas coast are as likely to suffer a direct hit from a hurricane as those on the coast of Florida.  And that reality has caused insurance companies to raise premiums up and down the entire east coast.

Yet despite the devastating hurricanes that seem to slam the east coast (and both coasts of Florida) year in and year out, builders keep building and buyers keep buying, no matter the risks.  I stumbled upon a listing for a $20 million house on Kiawah Island in South Carolina.  Kiawah is a barrier island – “barrier” because it takes the brunt of Atlantic storms before they typically peter out inland.  Part of the attraction of this modern mansion is its location close to the ocean. But that, of course, puts the home in a risky position – both from a location standpoint and an insurance coverage standpoint. 

I checked out the address on a site called RiskFactor.com which assesses a home’s risk to fire, heat, wind and flooding.  The good news for the big house is that its risk factor for fire is “minimal,” with just one chance in 10 of a fire.  The bad news for the house is everything else.  Setting aside the heat factor, rated 10 of 10, or “extreme,” the wind and flood factors are both nine out of 10.  Regarding the flood factor, RiskFactor.com indicates that this year the house could take on as much as eight feet of water, not too far off the site’s prediction of more than 10 feet at some point in the next 30 years.  As far as wind goes, the site indicates the possibility of a three-second wind gust this year of 147 mph, and a possible 170 mph at some point over the next 30 years.

It is possible, even likely, that the dire predictions won’t come true this hurricane season or next, or the one after that or, for that matter, anytime in the next 30 years. But more and more, insurance companies are factoring in the potential and raising their rates or, worse, refusing to cover homes in certain areas. Those of us searching for our dream homes should at least consider thinking like an insurer.

Perhaps if a couple can afford a $20 million home, then they can afford to repair or replace it, or pay insurance premiums, if any company will write the policy, of tens of thousands of dollars a year.  Good for them, but most of the rest of us would have trouble sustaining our much-more-modest properties in the wake of a 140-mph hurricane with storm surges that would put eight feet of water or more in our houses.  I am not a scientist, but I for one believe there is something going on with the weather that may not be easily resolved, if at all.  And if that is correct, consider all that is written above as a cautionary tale. 

Caveat emptor.

Larry Gavrich Founder & Editor Home On The Course, LLC

Coastal Homes So Near and… Yet So Far from the Ocean

On its website, the town of Pawleys Island describes the four-mile-long strip of land that forms Pawleys’ eastern edge as “a barrier island less than 4 miles long and mostly 1 house wide, separated from the mainland by a beautiful salt marsh and accessible by two short causeways. Generations of visitors have returned with the feeling that ‘their blood pressure goes down when they cross the causeway.’

Given the ever-present threat of hurricanes, Pawleys’ town fathers should be a little clearer about which direction across the causeway relieves stress. 

That said, in 23 years of home ownership in Pawleys Island, my wife and I have never suffered significant damage of any kind to our condo, or any stress about the likelihood of damages.  Yet we live close enough to reach the beautiful Pawleys Island beaches in less than 10 minutes, and our Jack Nicklaus golf course includes a view across the marsh to the homes that face the ocean.  We are so close…and yet so far.

Here are three golf homes in and near Pawleys Island that might be close enough to enjoy the beaches and yet far enough to be safe from significant damages.

Pawleys Plantation, Pawleys Island

2 BR, 2 BA condo

End unit, view of Nicklaus golf course, fully furnished with mechanical upgrades in last few years, including HVAC, refrigerator and water heater.  Neighborhood pool and clubhouse and golf course within three-minute walk. Reasonable golf membership fees or pay as you play.  Rental income potential.  Listed at $289,900. Click here. https://www.golfhomes.com/95-3-weehawka-way-pawleys-island-south-carolina-29585-p4127075.html

The Reserve at Pawleys Island

3 BR, 4 BA Condo

Open floor plan with master suite on entry level, large screened porch and patio with view of lake, and an inventive open floor plan.  The golf course was designed by Greg Norman and is part of the McConnell Group of courses in the Carolinas.  Membership in the private course provides access to 13 other McConnell courses.  Private beach access just one mile away.  Listed at $680,000.  Click here.  https://www.golfhomes.com/113-huntington-lake-circle-pawleys-island-south-carolina-29585-p3915967.html

True Blue Golf Club

2 BR, 2 BA townhome

One-level living across from the imaginatively designed Mike Strantz golf course. Spacious kitchen and formal dining room is great for entertaining, and the screened in porch and patio area is a great place to relax after tackling Strantz’s bunkers.  Pawleys Island beach is less than 15 minutes away, and between the towns of Georgetown and Pawleys Island, you have access to plenty of shopping, restaurants and medical centers. Listed at $319,000.  Click here.  https://www.golfhomes.com/724-pinehurst-ln-pawleys-island-south-carolina-29585-p3645428.html