You cannot own property with a mortgage without insurance (and if you don't carry it, your mortgage servicer will force place it, at a much higher rate). If updated risk pricing prevents people from obtaining insurance (either because of high cost or total inability to have a policy written), real estate transactions dry up and people will have to move elsewhere to buy. Some buyers can probably perform cash transactions, rent properties out without insurance/self insure, perhaps business owners provide corp housing where a geographic benefit makes the operating model palatable, etc. But wage earners who desire to own RE will need to migrate if they need a mortgage.

I'm paying ~$4k/year in homeowner's insurance through Florida's high risk pool. I know people closer to the coast paying as high as $12k/year. This is unsustainable, but necessary to accurately price risk. Real estate markets will respond accordingly.

https://riskfactor.com/

https://www.npr.org/2023/07/22/1186540332/how-climate-change...

https://wusfnews.wusf.usf.edu/local-state/2023-04-04/florida...

https://www.cbsnews.com/texas/news/texas-home-insurance-pric...

https://www.nbcnews.com/business/consumer/homeowners-go-with...

People still owned homes before residential mortgages were a thing, which didn't take its modern shape until the 1930s. In uninsurable markets, liquidity will drop, prices will follow, until a new equilibrium forms. In sleepy beach towns where the primary use is recreation, that equilibrium will probably be very low. In New Orleans, the economic value is significantly higher and the equilibrium will be commensurately higher.

Of course, in the real world, the federal government will step in to subsidize insurance (more than it already does) and keep that 30-year mortgage available in New Orleans, for the reasons I outlined in my original comment.

> I know people closer to the coast paying as high as $12k/year. This is unsustainable

Do you know how that $12k/year translates to a percentage of the home's value? Naturally, $12k/year insurance on a two-acre Palm Beach beachfront palace with imported Italian marble countertops and Viking ranges is different than $12k/year on some normal house.

Speaking of unsustainable: I know people in New York (state, not city) that pay 2-3% a year, every year, on property taxes. It's a different kind of risk that needs to be priced ;-)

That property in question is ~$650k in the Orlando area. It is not an overly fancy home, having been inside it. My property value is ~$400k, 40 years old. ~40 miles from the coast, 90 ft above sea level. I will be required to carry flood insurance, even though there is no chance my property will ever flood. I do not plan on owning this property much longer (relocating to a climate change compatible geography, based on a 100 year time horizon).

https://www.citizensfla.com/-/flood-insurance-coverage-rules...

Got it, thanks for the answers. 1.85% of home value per year for that Orlando home is indeed quite pricey, with one source saying that the national average is about 0.35%[0]. Yours isn't cheap either at ~1%, but I would still consider that a reasonable price. Mine's roughly 0.5%.

> relocating to a climate change compatible geography, based on a 100 year time horizon

Careful who you trust: several studies of this sort ranked Vermont very highly in terms of being safe from climate change[1], but as I'm sure you've heard it recently suffered from catastrophic flooding. The final toll may come to single-digit percent of Vermont's GDP. I hear the Great Lakes area is popular for people desiring someplace safe from climate.

I wish you the best with your relocation.

[0]: https://www.creditdonkey.com/average-cost-homeowners-insuran...

[1]: https://projects.propublica.org/climate-migration/

> I hear the Great Lakes area is popular for people desiring someplace safe from climate.

Indeed, that is where I am headed. Appreciate the discourse.