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?
If you know the government will throw billions to your aid, then a disaster zone is actually far less risk than if they would not.
Or maybe you just like the beaches in Miami so much that you would rather part with the money than the beauty? Still a market working rationally.
People in hurricane zones are used to evacuating and have plenty of advanced notice. For the vast majority of the time they're able to enjoy a healthy beach lifestyle - relaxing, great climate, fun hobbies. It's extremely rewarding to live near the beach. I'm sure there are studies that show positive impact to health and healthspan outcomes as well.
The problem is that America was for several generations living in a privileged bubble. The post-WWII period was very good for us. We could afford to build, rebuild, and rebuild again. Labor costs and material costs were low, and there wasn't overwhelming demand. This advantage lasted for a whopping 50 years as we transitioned from strength to strength, shifting from a manufacturing economy to a robust consumption and services economy.
Until recently, it didn't cost a million dollars to put a home near the beach. What's changed is the economic position of the country and the financial capability of the average American. We can't build houses for $60,000 anymore.
This is less a signal of "insurance getting smarter" and more of a signal the outsized advantages of America are coming (have already come) to an end.
the post war economy was an aberration when the rest of the world was recovering from being bombed to hell, it was never going to last forever. excesses like cheap rebuilding are just not as good of an idea of building to last in safe areas.
It's a totally different story now that the average beachside "home" is a $10 million dollar mansion.
Skipping past all of the other negatives about living in a known disaster prone area, we couldn’t afford to rebuild even back then without endless deficit spending. As I speak, New Orleans is still in the process of rebuilding post-Katrina decades later.
> This is less a signal of "insurance getting smarter" and more of a signal that American excess is coming to an end.
They’re not mutually exclusive.
I disagree it is humanitarian to entice people to live in more dangerous areas.
Today - there are thousands of families who have to decide whether to live in an uninsured home in a disaster prone area or spend a bunch of money/uproot their lives/move elsewhere/find a new job etc. I'm going to guess most will stick with option 1, because they cannot afford the alternative.
I don’t feel sorry for these people. They made choice and the evidence this was inevitable was in front of them for 10 years at least. They don’t deserve special consideration.
Considering how we treat things like job loss, which is a good allegory here as it has all the same features of circumstance, why do they deserve special considerations that aren’t extended to other groups?
Using public funding to keep on bailing people out is going to get expensive for everyone and won't be that popular the more often it happens. Expensive bailouts make them a natural cutting target.
The way this works out financially is that insurance prices go first. Then banks do the obvious thing which is to be reluctant to provide mortgages on property likely to suffer damage within the mortgage period. That probably is already a thing. That in turn makes existing property a harder sell and affects property prices negatively. And as a result, some property mortgages might be under water before the property is under water. A natural disaster would wipe out the uninsured property and then the mortgage. Any banks with lots of exposure to that might be facing issues if that happens.
Any public funding used mitigate that is more likely to go to these banks than the people affected. Which won't be popular.
Easy to spell this out, because minus the root cause (natural disasters), this is more or less what happened around 2009 when banks had to be bailed out because of the subprime loans. Loads of foreclosures and misery. But it was the banks that got the bailout.
The predictable end result is that after a few disasters, certain areas just won't be rebuilt again because nobody is willing to fund that. Some people might move out before the worst happens. Banks and insurers will be the first to move out. Probably sooner rather than later. That probably won't be great for people that remain since investments in public infrastructure and maintenance of things like roads will also drop off for the same reason.
I hope you can get out of there before the house is unsellable, or at least get the material cost back.
"Rezoning" is a needless control that then prevents future development that might be impervious to whatever disasters caused the periodic rebuilding before.
The problem with this method is that it tends to gentrify the region. Wealthier people can afford to live elsewhere during the repairs, but people living paycheck to paycheck are often forced to take the money and sell the land.
The correct, but very unpopular decision is to forbid rebuilding in those areas.
This comment about how we shouldn't be living in disaster zones is completely out of touch with A) Where people live. and B) What a disaster zone is.
Coastal cities (where 59% of people live) will say it's prone to hurricanes and tsunami's, flooding and storms. 50% increase.
Inland cities, floods and landslides - 50% increase.
Desert Towns, dust storms and tornados - 50% increase.
Mountain Towns, floods and landslides - 50% increase.
Nomadic villages of hippies and communes, tornados and floods - 50% increase.
I know not of a single home owner who's premiums didn't go up, no matter where they live.
And those disasters are geographically off. Hurricanes are not a coastal thing for the whole nation, west coast does not get them. Tornadoes are not a desert thing. All those sound like being pulled out of a hat without actual knowledge.
I’m at least 500 miles inland. It no longer matters about geography and it matters whether there was ever one in the past. The last few hurricanes went deep into Midwest land so naturally, we are now in hurricane zones.
When I saw the headline "disaster-prone cities," I thought maybe they were talking about crime or terrorism or something. For something like a hurricane, everyone in the danger area would see insurance rates go up, not just those in the cities. Odd way to word it.
Here are your choices: a 800k house that require you to work 18 taco bell/gas station/home depot shifts per day OR out in the boonies where if you want insurance you need to work 5 shifts per day. Both are impossible, so you just work 3 shifts and don't have insurance and use food stamps to eat.
There stories are not well distributed but people that get priced out of cities end up buying a singlewide/double wide or just rent and then the house gets destroyed and they have no insurance and end up entirely on the streets.
So yes it is definitely insensitive to say that. Perhaps you would understand if your cushy tech job was 25k per year instead of 225k.
You're a woman so we're going to charge you double for health insurance because you know, your boobs might get lumps.
I do agree with people that "rebuild and rebuild and rebuild" in the same area without the codes catching up.. I think if someone is wealthy enough they can afford james hardie siding ALL the way up - for example in a fire zone.
I think the insurance should be the same cost but the payout should be capped based on the decisions that are made.
Insurance is a mechanism to transfer risk, this is exactly how it works. Actuaries calculate risk, and then the insurance company sells a policy they think they can make money on based on the calculated risk.
US health insurance isn’t insurance, it’s just called insurance for whatever reason.
Hurricanes killed around 2,000 people in the last quarter century, not tens of thousands, https://www.statista.com/statistics/203729/fatalities-caused....
Its not as simple as "N people died from literally being inside the storm, therefore the number of potentially saved lives is N". There is always a domino effect from a massive disaster, even if "just" a couple of people die directly at the hand of the disaster.
Next after heat waves is severe storms. Same thing. Then winter storms. Same thing.
Insurance companies are avoiding a couple particular types of natural disaster that have the capacity for massive property damage at a single point in time in a concentrated area, mainly tropical storms and wildfires. Those natural disasters just don't cause many deaths in the US.
Tens of millions of people live in those areas. If you're going to talk about "the resulting depressions, financial issues, etc." you might want to give some consideration to tens of millions of people being forced to move, to risk going uninsured, or losing their homes.
One common reaction to this is state subsidies or regulation to make it more affordable (see this in California and Florida). While this is bad, spending money on the problem is good. People often conflate "dont subsidize" with "dont spend money." Instead they should spend it to offset the damage/inconvenience done to the people affected. Moving assistance or something. Not subsidize living in dangerous areas.
It's kind of the Warren Buffet approach to people whose livelihoods are ruined by a changing economy. It's real harm and its not fair, but you dont stop progress. You also dont say "fuck em" - you support the people who get left behind.
Any assistance on moving out is a very bad idea. There are rising insurance costs, slowly, people have time to respond.
People in Florida did not even advocate for mitigations that would have prevented the rising costs, when they were given decades of warning.
Protecting home values above all else is very bad for society. Unless renters are given the same protection and massive handouts, it's a very unfair system
Yes, you support the people left behind with the profits of the people who are ahead.
The US voters just hate that type of equality. And as a result the vindication is merited - that is an inherent feature of non-merit based inequal societies, just the the US is.
> East Grand Forks, along with Grand Forks, was heavily damaged by a major flood in 1997. The entire city was under a mandatory evacuation and almost no homes were spared damage. After the flood, several neighborhoods had to be demolished because of damage. The city cleared development from the floodplain bordering the Red and Red Lake rivers. It developed a large park known as the Greater Grand Forks Greenway to provide a new recreation area for residents along the river. A similar park was developed in Grand Forks. The parklands, with trees and a variety of greenery, can absorb floodwaters and help protect the cities naturally. Moving residential and business development out of these areas also helps prevent future flood damage. In addition, a new system of dikes was constructed to protect the city from future flooding. The city has since rebuilt.
I'm sure stripping 45% of thousands of people's net worth won't have significant economic or cultural impacts. Truly, the market is a miracle.
I'd be interested in relocation programs or something but I can't see how the value of the houses can be preserved.
Regardless of climate change: punishing people for where they live is, historically, a great way to kick off a revolt or a civil war. People need to move out of storm zones, but the move needs to be executed mercifully or those who are forced to move will have little incentive to consider themselves members of society (to everyone's detriment).
My real point commenting initially though was that this situation is an excellent example of the failures of raw capitalism. Raw capitalism is a system perfectly willing to allow, admit, and increase inequality of outcome based on deviation from initial conditions. In contrast, societies only work long-term if there are some guardrails on inequality of outcome (otherwise, what is the point of cooperation?).
If ten or a hundred thousand people are at risk of losing half their net worth, that's the kind of thing a functioning society should probably step in on to lower the burden.
If you don't want that speficikt risk, then rent and invest the difference in broad etfs - it will typically put you equivalently.
"Climate migrations" has been an alarm bell for a long time. It's just people didn't want to listen.
The issue with your statement is if it's a person or human-created entity that's doing the stripping, that's a problem we can address. When it's the environment we live on doing the stripping, well, that's simply a predicament.
If you want to get mad at someone, get mad at the groups that have been propagandizing for the last few decades that carbon is a myth and we're completely decoupled from the ecosystem we live on.
US taxpayers have funneled untold billions of dollars into these states to prop up their real estate industry by providing FEMA flood insurance at hugely subsidized rates, while the private insurance that's becoming unaffordable only covers wind damage. When you see those photos of towns wiped away by a hurricane, that's flood damage, and your tax dollars are paying to rebuild those houses in the same place. Over and over.
In a just world there would be legal liability for some of the real estate industry folks who persuaded people to put all of their net worth into an asset that's going to be blown away in the next hurricane, and other consequences for the politicians who enabled and encouraged them. The odds of this happening in real life seem to be about zero.
This is one reason why legislation is a smarter, better form of regulation. But capitalists rely on promoting the evil in people, and do not care about anyone but themselves. So it is preferable to them.
People should not live in disaster prone areas. And if they want to the cost for that should not be socialized.
https://en.m.wikipedia.org/wiki/National_Flood_Insurance_Pro...
A group in Houston sued the city there over something like this and their argument was that redrawing the map was an unconstitutional taking of the land.
A summer camp in Texas was flooded this year and had fought against their land being moved into a flood risk zone on the map. They were able to beat it in court but not in reality, and children died.
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.
You can pull the annual reports for any publicly traded insurance company if you are curious about the numbers.
But if it gets even remotely close to that point the yearly insurance is a significant portions of the house worth and it’s obviously not affordable/insurable - whatever term one wants to use.
At that point if one can’t self insure then they can’t afford the house
Everyone's home insurance premiums should be lower than they actually are. Except they're not, because we have to pay to offset the cost of all the people rebuilding their houses on the Florida coast every few years.
This only holds for government insurance programs. And in that case all taxpayers are subsidizing them.
Citations:
https://news.ycombinator.com/item?id=44477195
https://news.ycombinator.com/item?id=43366311
https://news.ycombinator.com/item?id=42450680
https://news.ycombinator.com/item?id=41664750 (top comment of this thread aggressively relevant)
https://www.hbs.edu/ris/Publication%20Files/24-051_f1329bc3-...
I get ties to communities. I get "socialism" - I'm all for universal healthcare.
But maybe there are limits, you get one issue. If you live in a flood zone, your house gets rebuilt, and it floods again, maybe the requirement of that insurance is relocation.
As it stands, there are people who have had their home rebuilt three times in 20 years in the same location through insurance and FEMA. I'm not saying that from the perspective of "that must be nice" - losing valuables, all the issues with flooding, are entirely horrible and unpleasant. But at what point do we as a society say "Y'know, maybe just don't build there... again."
And they believe that it's happening now.
Either way the insurance is driven by data on the ground, and I think they're fairly trustworthy about keeping their own costs down. If they say it's uninsurable it probably is a risk.
What is important to remember though is weather event =/= climate change. We expect a certain amount of randomness in hurricanes and natural disasters, and saying a year with more hurricanes is due to climate change is the same as saying a cold winter disproves global warming/climate change.
No one's saying hurricanes only exist because of someone's politics. The insurance beancounters are very much saying the winds are faster, more frequent, and do more damage than they used to.
And there's nothing silly about the billions of beans they're counting.
The comment I'm responding to says this, and you seem to be implying it as well. Insurance rates aren't going up because there are more hurricanes, they're going up due to regulatory changes, fraud claims, and rising costs/inflation. The article blames a 0.5 increase in insurance rates in FL due to fraud, and regulatory challenges in CA.
I'm sure climate change plays a role, but saying the hurricane being 1% stronger is to blame for high insurance costs is nonsensical and doesn't track logically.
> Experts say the spike is driven by climate change making disasters more frequent, the rising cost of construction materials, and a flood of lawsuits in coastal states that drive up payouts for insurers.
Sure, lawsuits/regulatory issues is a contributing factor. #3 behind #1: climate.
But even so, the "regulatory challenges in CA" are insurance companies saying "we don't want to insure wildfire areas", the state saying "you need to offer insurance to everyone or no one if you want to play here because it's fundamentally abusive if you're gonna start picking your own areas (we all know you're gonna redline into only the lowest risk/highest return areas)", and the insurance companies saying "well, wildfires are too risky so looks like we'll insure no one then."
Calling that "regulatory challenges" instead of "wildfires aren't great for insurance" is kinda a shit argument.
In no way, shape or form do I say that.
This is spot on. I once commented on a WSJ article reporting a similar story. The climate change deniers were in full force on that comment thread. They hated my pointing out that it doesn't matter whether they believed in climate change or not. They still have to pay the higher insurance.
It won't be painless, but it'll be less painful than letting the market try to solve it and telling them "Good luck selling your stick-pile when everyone knows it's not safe to live here anymore!"
Inland from the coast of Florida is a swamp. Is that really any better? I know the orange man is a fan of draining swamps, but I'm pretty sure that's not what was meant. People don't live in deserts. People just need to accept that the opposite of no water can be just as in hospitable
Where will people move, without a huge amount of homes being built, where will they move to ?
If the move, even with their current insurance rate, their payments/rent will probably cost much more then they are paying now. Especially if their home is paid off.
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)?
Problem is when the only provider of waterfront insurance is government taxpayers, that kinda looks like people who own waterfront property have convinced everyone else to subsidize their lifestyle.
Does the high cost of insurance not directly follow from the risk of disaster? This is strangely worded.
Intentionally. People refuse to accept that storms are becoming more powerful while bringing much more rain. Shifting the blame to evil insurance companies is much more palatable than accepting that the climate is changing
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.
We celebrate people taking home gains on their houses - as such we also happily accept people loosing on their investments.
That is the game.
What would you propose instead? That the government should put a ceiling on Florida house prices?
You can equally believe what you want - though that will not stop a hurricane.
There are no big time winners without big time losers.
What you are discovering now are fundamental consequences of inequality. It is not just for housing, but for all aspects of the society.
Either we celebrate the winners in an in-equal society, or we instantiate an equal society.
You can't have your cake and eat it too - neither can the losers of the Florida housing market.
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.
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.
But don't tell me that home owners in Florida don't drive cars.
> as if displacement is a desirable outcome
Maybe we shouldn't treat housing this way. A house gives you shelter and somewhere to sleep at night. I'm not advocating for a chaotic system that forces you to move every year but rather something that gives you options in the case that something does go sideways (i.e. a much bigger housing supply)
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.
elzbardico•3h ago
ronsor•3h ago
shadowgovt•3h ago
We will all pay the tab to restructure society to avoid this climate change effect, or we won't and we can expect the people who get screwed to not be particularly invested in being part of this society.
rjbwork•3h ago
shadowgovt•22m ago
... and if the country is willing to let its state suffer unmitigated disaster, what good is the country?
(Your wise choices mean you will likely come out on top regardless of how high your mountain is relative to the people who chose poorly. How concerned are you that your peak could be a little smaller because you live in a society with 340 million other people, half of whom are below average intelligence... And those people need help?)
primer42•3h ago