home ownership

Could Hurricane Harvey Increase Fla. Homeowners Insurance?

Hurricane Harvey's devastating property damage toll will easily be counted in the billions of dollars, but insurance industry experts say they shouldn't have an impact on property insurance rates in hurricane-prone Florida.

AIR Worldwide, which advises companies on managing risk, estimates that Harvey caused between $1.2 billion and $2.3 billion in wind and storm damage. Another analytical firm, CoreLogic, forecasts between $1 billion and $2 billion. Risk Management Solutions says the total could be $6 billion but likely will be less.

But that's just the hit for property and casualty insurers. Flood damage could be tens of billions more.

Lynne McChristian, spokesperson for the Insurance Information Institute, an industry organization, said that Florida homeowner insurance rates shouldn't be affected for one simple reason: rates are set at the state level and are based on what happens within the state. "What happens in Florida stays in Florida, what happens in Texas stays in Texas and that is the way it works in every state," she said.

The organization's website, www.iii.org, includes a chart that shows average insurance rates across all states. Those reflect the risks inside each state's borders.

The lowest insurance rates in the U.S. are Idaho and Utah, she said. "That's primarily because you don't have hurricanes there – or major flooding. And, there is not the population density of more disaster-prone states."

That's not the case for the struggling National Flood Insurance Program, because that is regulated at the federal level, she said.

Jay Neal, CEO of the Florida Association of Insurance Reform, also said he doesn't expect Harvey's toll to impact Florida homeowner rates. Still, he said, the devastation in Texas should be a wake-up call for the estimated 1.4 million Florida homes vulnerable to storm surge but not currently covered by flood insurance.

"People still don't understand that storm surge is not covered by their homeowner policies," he said. "People need to wake up and look at Texas. This could happen here."

In a statement, William H. Stander, executive director of the Florida Property & Casualty Association, said the organization can't speculate on how Texas losses could impact Florida rates: "More importantly, all Floridians should recognize the importance of buying flood insurance, which is not covered under your homeowner's insurance policy," he said.

Homeownership is Still a Better Deal Than Renting!!

Limited housing supplies are forcing prospective homeowners to make significant compromises, such as devoting less money to saving for emergencies and retirement, a new survey says.

According to a study commissioned by Owners.com, an online brokerage, about 60 percent of consumers said saving for a home takes priority over saving for an emergency or retirement, and 72 percent said it would limit their contributions to other investment funds.

Although most consumers prioritize homeownership, the lack of affordability is a cause for concern. According to the survey, 69 percent of consumers fear not having enough cash for the downpayment.

Besides cutting back on other savings, the survey respondents are willing to downsize their dream homes: 51 percent would consider buying a fixer-upper, while 36 percent are willing to purchase a smaller home than what they prefer.

"Constrained inventory in many areas and climbing rents, home prices and mortgage rates means it's not getting any easier to be a first-time buyer," says Lawrence Yun, chief economist of the National Association of Realtors. "It'll take more entry-level supply, continued job gains and even stronger wage growth for first-timers to make up a greater share of the market."

Home buyers are getting squeezed by several forces. Total housing inventory in December was 6.3 percent lower than a year ago and has fallen for 19 consecutive months, NAR says. The supply crunch is pushing up prices, with the median price of an existing home up 4 percent year-to-year.

And 30-year mortgage rates have risen to 4.19 percent recently from 3.47 percent in late October, increasing monthly payments. Also, despite the growing housing demand and strengthening economy, home construction is still stuck modestly above recessionary levels.

Even with the challenges, however, experts say homeownership is still a better deal than renting.

Florida Has 4 of the Top 5 Hottest Single Family Markets

Among the 50 largest U.S. markets, the top five (in order) were Orlando, Palm Beach County, Fort Lauderdale, Tampa and Dallas, according to Ten-X, an online marketplace. Each metro area had "a vigorous combination of consistently strong demand, home price appreciation, and economic and demographic growth."

While Florida metros again dominated the rankings, Ten-X said there was movement within the top five slots: Orlando jumped from fourth to first to overtake Fort Lauderdale; Fort Lauderdale dropped to third; Palm Beach County remained unchanged in second; and Tampa slipped from third place to fourth.

Healthy economic and demographic trends are fueling demand throughout much of the Sunshine State, keeping sales elevated and enabling significant price growth. Dallas, for its part, is benefiting from a more diversified economy than most other Texas metros, allowing it to withstand pressures from low oil prices. Las Vegas, still a leader in terms of housing demand, sales and job growth, now ranks ninth.

Investors Want to Help You Become a Homeowner

A buying program called "homeownership investors" can help buyers purchase a larger home than they could otherwise afford or, in some cases, help a buyer qualify for a home he or she could not afford otherwise.

On the front end, the process simply gives homebuyers money towards a downpayment – money that doesn't have to be paid back either through monthly payments or even interest as long as the buyer lives in the home. The extra money can help a buyer upgrade to a bigger property or pay less per month on the mortgage since the total loan amount will be less.