‘If The Price Falls, You Still Have Your House’
The Florida realtors had a press conference Thursday. “Getting affordable catastrophe insurance is the biggest challenge facing nearly every segment of the housing market, the head of the state’s Realtors group said Thursday. ‘Citizens is no longer the insurer of last resort,’ said Mike Dooley, president of the Florida Association of Realtors. ‘Citizens is becoming the insurer of only resort.’”
“Against a background of local homeowners getting socked with budget-busting rate hikes or discovering their insurer has dropped them completely, Dooley called Thursday for national catastrophe insurance. The Florida Association of Realtors has passed a motion to make the issue ‘a national talking point.’”
“‘There comes a time when the free market can’t protect us,’ Dooley said. ‘We don’t have a free-market military. We pay taxes and ask the government to protect us.’”
“Florida Insurance Commissioner Kevin McCarty said: ‘I continue to believe that catastrophic losses are not an insurance problem, but an economic security problem.’”
“He also pointed out that most lenders insist the homes they finance carry disaster insurance. ‘If you can’t get insurance, they’ll go out and get it for you on the international market and you’ll have to pay whatever it costs,’ Dooley said. ‘It’s a condition of your mortgage. And if you can’t make payments, then that’s another problem because banks don’t want a whole lot of houses on their hands, especially in a market like this.’”
“As for the current market, remember that real estate is a long-term investment, Dooley advised. ‘There is no real estate bubble,’ he insisted. ‘A house..doesn’t go away. If the price falls, you still have your house.’”
“The seminar’s host agreed. ‘Be patient,’ counseled Jim Flood, regional president of HomeBanc Mortgage. ‘The last two years have been the best years in the industry. We need to be grateful for that.’”
No. You only have as much house as you have equity.
Do you guys know the saga of Leo Wanta. Well i sugguest you read up on him. This might be the reason why markets have been looking so illiquid lateld. Leo wanta his money and he wanta It now. I/m not spoiling the plot for all who don’t know, but it is intersting timing. Imagine what would happen if banks around the world had to recall 70 trillion dillars in loans and debt instruments.
Here’s a link for part of the story. http://www.rense.com/general70/leo.htm
BREAKING NEWS: As of 5:12pm today Friday Jun 23, Phoenix (Maricopa+Pinal counties) are OVER THE 50,000 inventory mark!!! To be exact: 50,141!!!!!!
Courtesy of Ziprealty.com
Your house is still there, but your savings and standard of living go away.
You have your house, but not the money you paid for it. Kind of like Enron and Worldcom shareholders still have their stock certificates.
Then again, you don’t have your house if the bank forecloses your suicide loan, though it is still there and unoccupied.
Maybe foreclosures will take a long holiday by decree of the federal government, say three or four years, - if too many homeowners suffer, then there is political will to do so. If I remember correctly, there were some similar rules in the thirties.
Weren’t those “protections” put in place after the Great Depression in order to avoid another scenario like that? If I’m not mistaken, the “protections” that we’ve had have been dismantled one by one over the last 6 years.
I imagine it being like the aftermath of a neutron bombing: The structures are still standing, but the inhabitants are all gone.
Sort of like Lancaster/Palmdale after the end of the last several cycles. Or Calico, CA.
Sorry to followup on my own post, but just did some fact-checking with someone who was there:
Or like Phoenix in 1973. Whole neighborhoods of empty houses, with the occasional methadone clinic operating out of an otherwise abandoned house. Absentee landlords letting college kids and military folks attempt to re-occupy houses that they could not rent or sell, to see if the property could be reclaimed from the squatters. Deals such as: “if you can make it rehabitable, you can live there for free.”
I hate to sound like an old fart here, but you don’t need a “Greater Depression” to see Potemkin villages like Phoenix turn into mega-ghettos. This was *before* the crash of 1974, BTW, about coincident with Nixon closing the gold window.
Oh Lord, I *am* an old fart.
Dear SM Landlord,
No, you’re not an old fart, you just have lived long enough to accumulate wisdom from remembered history, which is more than 98 % of the current real estate gurus and bandleaders have.
Maybe this is why it only takes 2 years in AZ to get squatter’s rights. The state has a vested interest in *someone* taking title and paying taxes. Most states are 5 to 20 years.
‘There is no real estate bubble,’
“If the price falls, you still have your house.”
But, But, unless the non-existant bubble burst how did my house drop in value. ?
“Dooley called Thursday for national catastrophe insurance.”
Look Pal, you think I’m paying for you to live in Hurricane Alley or a flood plane you can think again.
These guys are sounding more and more moronic as this bubble bursts.
“Dooley called Thursday for national catastrophe insurance.”
We already have free national catastrophe insurance.
It is called FEMA.
with 1.4 Billion (yes, “b” not “m”) dollars misspent via FEMA ‘free’ money (yours and my tax money), I don’t think FEMA is the answer and no amount of tax will cover people’s foolishness. If you can’t get coverage, then you should move on or pool your own insurance. Just don’t force me to take care of your problems! Besides, didn’t this country start with a Revolution over unfair taxation?
People bought sex with my money with FEMA cards.
Who wouldn’t? FEMA hookers for everyone!
It was pretty funny listening to the testimony before congress about this fraud-on NPR they had a video feed of some totally flat-sounding guy testifying in the most serious tone “Items purchased included 4 New Orleans saints season tickets…a 200$ bottle of Dom Perignon champagne at a ‘Hooter’s” restaurant, and a copy of Girls Gone Wild Videos”. I mean that has to be the first time that “Hooters” and “Girls gone Wild” have been mentioned in the US congress-just think these are now in the congressional record for all eternity.
These guys sound like great prospective employees for Halliburton.
t-bone said
I mean that has to be the first time that “Hooters” and “Girls gone Wild” have been mentioned in the US congress
t-bone - I presume you mean “officially mentioned” Something tells me it’s not the first time they’ve been mentioned
“These guys sound like great prospective employees for Halliburton.”
Yeah- or interns for Hillary Clinton. Bill already had his turn at the public-debauchery trough, ‘Here Monica, have a cigar, baby..”
On NPR they found out people bought sex change operations on their FEMA cards.
they are begging to keep the housing bubble going. i was in miramar and sunrise and they keep building condos. more condos, more supply that people cant afford,
its getting hot down here in south florida and yes, other possible tropical storm in a few days.
‘There is no real estate bubble,’
“If the price falls, you still have your house.”
….. And you also have a mortgage to pay for your entire working life (or worse)
[ May be De Beers should start a new campaign .. ‘A mortgage is forever’
“a mortgage is forever”
sounds like a bad bond movie
Ha! Cute.
mortgage=mort*gage
mort= death (in French)
gage=pledge
with interest-only option (perpetuity) it truly is extending beyond one’s live….
So in France did they used to send you to the gallows if you couldn’t pay your mortgage?
When free market insurance is unaffordable, that is the free market telling you, “This is a bad place to have an expensive house.” You should listen to the free market. It knows what it’s talking about.
Dooley, like most, doesn’t know where his socialism ends and his fascism begins. He proves that all taxation is unjustified theft.
Diemos and Mark — ditto to you both. I’m a lifelong Floridian. I don’t want to pay for California’s next earthquake and non-Floridians should have to pay our next hurricane. I fear that only the great pain of a depression could restore a sense of responsibility for self in our country.
Worst-possible typo: …non-Floridians should NOT have to pay…
Yeah check this out Comrads:
See below one of Kning George Bush’s government takeovers.What am i thinking “executive Order” in the name of protecting private property. Media will hail this BS. as counter manding the recent Supreme ruling on “eminent domain”. BUT in truth this action is an abolition of Private property gor the “good of the genreal public”
>>>As one poster state now you gold, food, and guns can be conscripted by the Feds……welcome home Snowball.
Little did we know in 2005 that the bubble top in Real Estate would soon lead to the loss of a right to own property.
http://www.whitehouse.gov/news/releases/2006/06/20060623-10.html
“‘There comes a time when the free market can’t protect us,’ Dooley said. ‘We don’t have a free-market military. We pay taxes and ask the government to protect us.’”
As Ben Jones himself once pointed out, there is no Plunge Protection Team for housing
This is one of the larger reasons FL home prices have skyrocketed - the implyed promise that the Government will bail-out those unfortunate souls whos houses have been so tragically lost in a hurricane but who couldn’t afford insurance. This is wrong on so many levels. Where these people forced to live in FL? Are they blissfully unaware that large hurricanes roar through parts of FL almost every year? If flood and wind insurance is a neccessity - why wasn’t the cost of it considered when they bought their house? Why am I, who live in AZ, being asked to help pay for FL hurricane insurance? SImply put - without subsidised insurance, FL home prices are unsustainable. That is why these knuckle-heads are crying about a national insurance pool.
“If the price falls…”
–your debt does not.
Exactly. Couldn’t be more appropriate. These bubble pumpers simply don’t get it, or at least they don’t let on that they do. Calming the fears of the FBs so the lenders get a timed-release dose of TNT instead of a nuclear chain reaction.
However, debt does fall if real inflation takes place: esp. if everyone’s wages/income rises. If we get stagflation, then that won’t help.
TYou are referring to controlled inflation over time. If inflation rockets to 10% and rates hit 15% home values will crater to the tune of 75% and the debt is still there. Of course it’s much worse than you’re considering since I am certain you’re thinking fixed rates. 75% of mortgages in the prime bubble areas over the past few years have been ARMs or exotics, HELOCs adjust monthly…
True - the debt doesn’t just go away - IT IS CRIPPLING IF INFLATION ROCKETS!!!
Yes I was assuming fixed rate but if it isn’t fixed, then the mortgagee is SOL. [Mortgager is SOL too since the mortgagee will BK or foreclose or walk away.]
‘A house..doesn’t go away. If the price falls, you still have your house.’
Unless… (You guys already know the reasons!)
If the price falls, you still have your house! If you blow your legs off with a landmine, you still have your arms! Woohoo!!
I am sure Dooley’s wisdom will be a lot of comfort to the hordes who bought specuvestor property in the swamps with timebomb mortgages.
Michael Dooley’s email address is homeport@prodigy.net.
Remove the trailing dot.. should be homeport@prodigy.net
We should all send him Kudo’s on his Liars Club award for “there is no bubble”
Here’s an idea . . . maybe we shouldn’t build in areas prone to natural disasters! When things like hurricanes and forest fires occur almost every year in an area, it could be that that place would be better off as a park.
What about when Sea Levels rise? Then what? You can’r rebuild if your yard is under water.
‘The last two years have been the best years in the industry. We need to be grateful for that.’”
Yeah, you parasites have done quite well fanning the fire and milking us for every last dime. The giant can of RAID is coming for you cockroaches and not a minute too soon.
Yep, it was fun for them to collect big commission checks with very little work. That sounds like a lot of fun compared sitting in a office all day.
Did he just say:
…because banks don’t want a whole lot of houses on their hands, especially in a market like this.
And then follow that up with this?:
There is no real estate bubble, he insisted.
Talk about talking out both sides of your face, sheesh!
Oh yeah, and everyone should subsidize Florida’s beach house insurance, talk about communism. Oops! Sorry.
No need to “oops” — it is blatant socialism, of the worsening kind. We’ve been marching down that road since the New Deal.
How much crap are we going to have to wade through until this ends? A national economic security issue if houses get destroyed? You have to be joking Mr. Realtor schmuck. The only true economic disaster would be a replay of the dustbowl on a large scale. Food and water are the basis of all economies and are not even recognized as such until they aren’t there in plenty. Houses? Tertiary at best in terms of disaster. These bastards call it disaster since their bull**** business may be in trouble. Bite me you pseudo-commie bastards! Call me for help when the Great American Famine begins, then I will say we have hit economic “disaster”.
I guess there was no beanie baby bubble either since there are a whole lotta folks that still have their beanie babies! What an ass!
With how fat we all are now, there should be plenty of blubber to tide us over for at least one winter
You might actually get that dust bowl too. They stripped away a ton of ton soil to build McMansions. Stop watering and tending to the lawn, the grass dies, turns dry, blows away. Seriously, I just saw a study on how new houses within the past 10 years have stunted trees because they effed up the topsol it grows in by stripping it all away to build useless monstrosities.
I just had to take the US Green building council professional accreditation test.
I passed.
The environmental/soil/agricultural impact of the housing bubble is staggering.
Guys, we won’t starve in this country. We waste more grain, potatoes, corn, etc. than we know what to do with. There is more farmland than we will ever need to feed the masses. This isn’t the same US Agriculture Industry of the 1930’s. Furthermore, you can’t build enough McMansions to cover a tenth of Nebraska let alone the entire farm-belt.
That being said, we are fat Americans. Beyond fat. We are totally obese and in everyway too. Our waistlines, spending and consumption are out of control. We need bigger cars and bigger houses to support our ever-expanding asses. Plain and simple, we are Rome circa the 3rd Century AD.
It’s time for a rebalancing. Sadly, it’s going to hurt everyone. However, from sacrifice comes reward. All this instant-gratification BS will evaporate and not a moment too soon.
By the way, the grain, corn and potatoes we waste every year could make some damn good alchol. An item I think is going to have alot of demand over the next several years.
Op-
Let’s hear it for booze. I think it gets a really bad rap. It is a totally natural product and if we could find a way to run stills with solar panels, it would be a 100% Green product. There is no more fun way to drink grape juice, and my personal favorite is Jack Daniels in place of some of the water in my oatmeal.
And let’s hear it for boozing in the morning while we are at it! If this is going to suck then it is going to have to register through several layers of booze haze!
I’d better take a trip up to Napa/Sonoma and re-stock my wine cellar. I’m predicting a 3-5 year rolling crash, and I figure that means at least 50 cases will be needed to keep me off the ceiling as this unfolds.
I would wait to restock that wine cellar. The wine price bubble will pop with the end of cashout home equity ATM spending money.
Next they will be asking for a mortgage bailout.
“We were blindsided by the Fed! Families are losing their homes! What about the children?!?! We must have national mortgage relief now!”
Just you wait.
Hey Mike… who mentioned bubble????
I thought the discussion was about insurance, but then you said “banks don’t want a whole lot of houses on their hands, especially in a market like this.’” Like What Mike??? a.. BUBBLE?
Good try though with the old… ‘There is no real estate bubble,’
Well Mike… maybe the Govenment will step in… and figure out that 6% is a tad steep for your commission… then maybe they will make you liable for false statements… like the SEC would… just think about it … its all up to you.
“A house is not a stock certificate. It doesn’t go away. If the price falls, you still have your house.”
That is bizzare on so many levels. First, Dooley is complaining about the inavailability of insurance. Why would you need to insure something that “doesn’t go away”? Second, you can insure stock. It is called diversification and hedging. Third, stocks certificates don’t go away when the price goes down either. Fourth, houses are often completely destroyed by natural disasters. When is the last time that a natural disaster completely destroyed the stock market?
I don’t know if I have ever seen more non-sensical talking points than these.
At least if your stock goes down 100% you can write it off against a gain on you taxes, something you can’t do with a loss in housing.
Heck, you can write off a 10% loss on stocks. Plus, you can sell off part of your stocks to buy things like food.
Plus you can click a button and cash out in a minute! Liquidity is God in any “investment”
You should really send these points to the guy’s email address. You have him dead to rights.
http://www.azcentral.com/arizonarepublic/mesa/articles/0623ev-realestate0623Z11.html
How come a newbie is featured in “The REPUBLIC”
Did they call any time at all???
I mean , did they ever call Ben?
It’s not surprising if they didn’t, assuming the real-estate-serving media wants to minimize public awareness of alternative viewpoints. Maybe it’s just a warning to real estate advertisers thinking about pulling their ads, showing off something like Debi before they bring out the big guns. Then again, if the sheople discovered this blog, they might never look at newspapers again.
I know the Republic is aware of this blog. Also, note the ‘doom’ in the URL. An attempt to paint bloggers in a poor light, IMO.
Wow…
Ben has been doing this for over a year and they interview someone who started looking into “the bubble” LAST MONTH?!?!
Seriously poor investigation by that reporter…that’s like interviewing an undergrad about a topic his professor has been researching for years…seesh!
She has no traffic at all if you go by the comments section. Must have been a buddy doing her a favor.
I saw that. She’s a realt whore and a “soft landing” no talent hack.
How come a newbie is featured in “The REPUBLIC”
Did they call any time at all???
I think the reporter just woke up and trying to cover up for time lost in Not reporting the bubble.
First there was bubble and then housing Doomed…
This is classic disinformation. ” What is unusual about Averett is that she is not a Realtor, economist or financial expert. She is a mother of five and a botanist who is more familiar with Arizona mint plants than real estate.”
The left-handed compliment, of course, is that she has no credentials, whereas Ben has beaucoup. They don’t want Ben or Patrick or David or Mish to talk to them. They want to make it look like Bubble bloggers are misguided, underinformed, possibly well-intentioned individuals who should not be taken seriously at all — but this is a free world, yada yada, and she gets to speak her peace.
MSM is a joke. They are small-minded, incompetent, and wholly bought and paid for. Most newspapers can’t even properly edit their columns for spelling and grammatical errors, much less check the accuracy of content. No wonder they feel so threatened by the internet, talented people speak the truth with impunity here.
Yep: AZ Republic, OC Register and the SJ Mercury are all dishonest.
Well, at least they put some of the salient points into the article, such as ” we have been using our homes as ATM’s for years.” That’s more than you’ll see in most R.E. articles.
The issue of insurability and risk is not trivial. Remember what the purpose of insurance is: to spread the costs of an unlikely, but devastating loss across enough of the population so the costs are bearable. The problems happen because we are getting much better at forecasting unlikely events, thus pinpointing the location of the loss.
Insurance companies are in it for the money, just like everybody else. Their goal is to minimize risk and maximize profit. If they can pinpoint and eliminate the riskiest customers, they will.
Unfortunately, this problem will continue to get worse as our risk forecasts get better. Imagine what health insurance will cost you if a test determines you have a 100% chance of getting cancer? Or 0%? Would you want to keep paying high premiums if your cancer risk was 0%?
If we can accurately determine that a million dollar house will be completely destroyed once every ten years, on average, then the correct response is not nationalized government supported insurance it is,
DON’T BUILD A HOUSE THERE!
or, build a house that you can afford to rebuild once every ten years out of your own pocket. When you subsidize stupidity it spreads.
Or a $100K/year premium. :0
“Or a $100K/year premium.”
Exactly.
Insightful point, Max.
Health insurance is another whole blog, but the system is clearly self-destructing. If the health insurance companies don’t go non-profit or at least private, we’ll be stuck with rationing and single-provider before too long, and real health insurance will only be available to people who can afford to travel to China for treatment. This is due to the impossibility of achieving endless quarterly profit gains to please Wall Street while at the same time paying for actual medical care out of premium income; in a world where more diseases are treatable and the patient can sue if the treatment fails.
Real Property insurance is merely a few decades behind the health insurance industry in its downward cycle.
If you think health care is expensive now, wait until it’s free.
Kindly bear with me…
here is a recap of internet conversation in a news group in 1990.
Here is the report :
33. This is not a typical recession. There is no glaring problem with
inventories of conventional merchandise. Instead, the system is clogged
by bad debts–most notably, real estate that nobody wants to buy or
occupy. [SF Examiner]
35. Coming hard times will be made even harder by the historically high debt
that American households have piled up during the past 2 decades, an
economic research group warned yesterday. If a lot of people lose their
jobs in a recession, bankruptcies, delinquencies and mortgage foreclosures
will come quicker and more often than if savings had been piling up.
[SF Chronicle]
37. The slumping housing market is continuing to take its toll on local real
estate firms, as several have reorganized or closed in the past few weeks.
[San Jose Mercury News]
32. Consumers’ confidence in the economy took its steepest plunge on record
in October, hitting its lowest point since the pits of the 1982 recession.
[Washington Post]
__________________________________________________
By this time, media price in california has started going down
that way we are not here as yet.
Gordon Hamachi used to run a newsgroup dedicated to realestate news.
See below what happened to rents
_____________________________________________
44. Residential rents rose 4.2% in the first half; but after inflation, “real”
it has been done before!!!
rents slid 0.6%, the National Apartment Association says. A weak economy
plus an apartment glut in some areas prompt incentives like a free month’s
rent or rebates in parts of Los Angeles and Chicago. Some landlords
actually trim rents for existing tenants. [Wall Street Journal]
————————————————————————
here is report on sales
———————————————————————–
Sales of existing homes from July to September nationwide slipped 2.5%
from their level a year earlier and will remain slow in the first half of
1991 because of the weakening economy, a real estate trade group said.
California’s home sales dropoff was one of the sharpest in the nation,
18.9%. [SJ Mercury News]
____________________________________________________
By this time see what happened in the Northeast
__________________________________________________
46. An investor in Maine bought a townhouse at auction for $116,000. That was
1/3 of the listed $350,000 price at the peak of the boom in house prices
in the mid-1980’s. [New York Times]
___________________________________________________
People never change, history repeats all the time. Any one saw the cars being offered this time around!
____________________________________________________
47. In Southern Santa Clara County, 85 home sellers are offering cars to
anyone who signs a contract this weekend. But the buyer has to agree to
the seller’s asking price. Even some of the real estate developers and
brokers who are sponsoring the event admit they don’t expect to sell many
homes this weekend. There are more than 700 homes for sale with the
San Jose Real Estate Board in the area from Morgan Hill to Gilroy; in
October, there were 68 sales. [San Jose Mercury News].
______________________________________________________
Does this sound familiar, at all ??
____________________________________________________
54. With recession looming, would-be buyers ask themselves: Isn’t this a
risky time to put all our savings into a home purchase? We end up with
no savings, and higher monthly expenses at the worst time imaginable–
the start of a national economic downturn. To counter this, aggressive
real estate marketeers are offering 1990s creative financing: Nothing
down. No closing costs. No transfer taxes. Plus, they’re offering new
reverse-lease options that allow you to buy now, but pack a parachute in
case you want to bail out later. [San Jose Mercury News]
__________________________________________________________
You have seen this already , by now right. I agree not every where but some places..
__________________________________________________________
56. Builder advertises: $50,000 Price Reduction! Executive homes in San
Jose’s Blossom Hill area from only $325,000. [San Jose Mercury News]
57. Builder advertises: $50,000 Price Reduction! Luxury view homes in the
Almaden Valley from $525,000. [San Jose Mercury News]
______________________________________________________
THis does not sound any different than what we see today, is it?
_______________________________________________________
58. As a slowdown settles over the Bay Area, people wonder how they can keep
up the high expense of life here. Jean Bishmann, a credit counselor with
the non-profit Consumer Credit Counseling Service of Santa Clara County
believes that many people in trouble are living on credit cards and 2nd
mortgages rather than scaling back spending. She predicts that in another
5 or 6 months “the bottom is going to drop out.” The people who face real
troubles, said Dan Feshbach, head of the Mortgage Information Corp., are
first-time home buyers who purchased at the market peak, especially those
with adjustable-rate mortgages. [San Jose Mercury News]
59. If you must sell now, be prepared to make significant concessions. House
prices and sales are stagnant because prices rose out of the reach of
most buyers. [San Jose Mercury News] ________________________________________________________
Let stop here , let me know if any one needs further lesson in history, I’ll try to accomdate youir request
Thanks for the history lesson:
An investor in Maine bought a townhouse at auction for $116,000. That was
1/3 of the listed $350,000 price at the peak of the boom in house prices…
Oh yeah baybee! That boom was a fly speck compared to this one. Ten cents on the dollar by 2010. Mark my words.
Okay, okay, two bits on the dollar.
Desidude — outstanding historical reference, for its detail above all. Thanks for saving or dredging it up.
This was a very interesting post. It’s interesting to see some of the statistics in print. I can remember hard times inMA after my first husband & I left, Michigan, & AZ ( sometimes 2 or 3 sets of hard times in 2 of these states ) which shows that 1. Real Estate is a blessing/curse, depending when you get into the market, what your financial situaltion is, how stable your individual situation is, i.e., savings amount, not just rate of savings, debt, and job security, and 2. Boy, I guess I’m getting to be an old fart, too
There was a time, when people were rational and built small shacks near the beach. Why pour a lot of money into a structure that could get blown/washed away? Why should insurers be expected to pick up McMansion tabs?
I understand the argument that some people in FLA are losing insurance and are miles from the beach. But again, if insurers were not socked by the ridiculous overbuilding on the shores, interior insurance would be affordable.
You should see the overpriced, oversized crap going up all around me. Remember the days when snowbirds were happy living in trailer parks?
My grandmother said she wouldn’t retire until she had $100,000 saved up. She had a 4th grade education. She eventually moved to FL (Pompano Beach) in the late 50s, had a tiny house, lived well. Saved 10% of everything she made. Sent her two kids to college, both did well. People are spoiled today, and the gubmint is always there to “protect” them from their foolishness.
Well, at least in California, the government has driven up the price of beach houses to the point that it is no longer feasible to build a beach shack. The permitting process alone costs big money and takes years, even if one were to build a shack, it would still cost $1 million++. So one needs to insure for replacement cost, which would include re-permitting (read re-bribing), a new environmental impact report, and heaven knows what else.
Worse yet, the property owner is not allowed to build groins or to grade sand to protect his property before a storm hits. So the “shack” has to be built to take waves.
People who want to own beach houses just need to pay enough in premiums to account for the expected periodic losses plus overhead and a profit for the insurer, or just overhead in the case of a non-profit insurer. The risk pool should be spread over comparable risks.
I am convinced that the solution to the insurance “dilemma” the insurors pose will include zoning, probably defined as X miles from the CCL (the legal measurable definition of the beach). A duller blade would call it, “everything east of I-95″ and some similar definition for the west coast, plus an “Are you crazy, Mon?” zone for the Keys.
Call it “The Krakatoa Clause.”
If that did (or does) happen, wouldn’t it upset the longest residing residents of the state? House values spiking had little effect on some of these people, but insurance “red zones” would cripple them, as the majority of Florida’s population is on the coast.
Before everything in Florida was 1 million dollars (3 years ago, LOL), people were perfectly happy “slumming it” on the coast, as they were full aware of the repercussions of living here.
How do we get so dumb so quick? Why does anyone need 5,000 oceanfront square feet? Society apparently can’t even afford it!
The whole “are you crazy mon?” is that somebody equates the value of such a volatile structure to one million dollars.
Chip, I agree with you comments. Insurers will(and should IMO) push for building area restrictions. Here in Missouri, whole towns got moved away from the Mississippi river and out of flood plains after sever flooding in the early 90’s. Not everyone was happy, but alot less property and lives are at risk.
OT….CNBC has poker championship on right now….Doesn’t that seem strange/ wrong?
How does showing gambling tournament help CNBC?
How does that differ from their regular programming?
sm_landlord dude what is in your beverages you have been on a roll. Man was that funny
Ludicrously overpriced California wines.
Thanks
Berkshire Hathaway charging up to 20x more for hurricane insurance than last year:
http://www.bloomberg.com/apps/news?pid=email_us&refer=us&sid=ar5371M0sbss
And yes, folks, that’s ‘20x’ as in 20 TIMES, not 20%.
Is home insurance part of the CPI basket in the US?
You know, if I owned any Berkshire Hathaway shares right now, which I don’t, ( had a chance to buy 1 share in 1990 at approx $9800, but would have lost it in my divorce anyway ), I would be selling. The shares are appreciated enough so that most people would make some nice money on them….Maybe Mr. Buffett is willing to lose up to $6B on one “event”, as he states in the article, but that’s over 5 percent of the total shareholder equity in the company, and I wouldn’t want to be a shareholder if the company lost that much. I’d take my nice profit and invest it in something that doesn’t insure for hurricane losses. Makes ya think.
IMHO in a wierd way this works out to be a partial hedge for Berkshire’s Foreign Currency transactions. A) If there is no Hurricane B-H retains the premium collected B) If there is a massive Hurricane, The dollar should fall further and B-H collects on its foreign currency investments.
OT: My city (Pittsburgh, which had a pop of 677k in 1950, currently about 310k) is trying to build more apts & condos downtown for artistes (I blame the love affair with Richard Florida, or whatever his name is). A $71 Million development, with $18 Million of that in State/City money… http://www.post-gazette.com/pg/06174/700583-53.stm
There are law abiding people downtown during business hours. Even then, Market Square has a bunch of bums & drunks & pigeons. Downtown is basically dead after 5pm. Besides the love affair with condos, I don’t understand the love affair with housing in center-cities like ours, when the parking tax is 50%, and there are plenty of malls within 10-15 mins of downtown, with no bums, free parking, and great stores.
National catastrophe insurance, eh? Hee hee.
Watch. As the good times for the I-Got-Mine set evaporate, the creeping socialist within will be springing forth at suburban BBQs everywhere…
Why should I be punished for my success? OK, my *former* success? So what if I’m being [foreclosed on/hit by straightline winds/surprised by a 5th divorce]. Is that *my* fault? Why, for years I’ve shown society how to [earn more by pushing paper/drive a car I can't afford/marry plastic surgery experiments]. Hell, that took [class/success/Godliness/balls of steel/emergency blood transfusions]. Now I’ve hit a [rough spot/bit of a downturn/trial of Job], and damned if I shouldn’t be able to ask that same ungrateful society to save my McMansion from [vicious acts of nature/my bad investments/my wife's departure with the pool sweeper and the bank account]!
“Against a background of local homeowners getting socked with budget-busting rate hikes or discovering their insurer has dropped them completely, Dooley called Thursday for national catastrophe insurance. The Florida Association of Realtors has passed a motion to make the issue ‘a national talking point.’”
Not no, but hell no. Why should someone in North Dakota or Colorado or Kansas have to pay to subsidize some dumb-ass who builds in a flood plain or in Hurricane Alley? Plenty of states and municipalities are already paying out big bucks to absorb all the Kartrina parasites and criminals they got saddled with, after a manageable act of nature was turned into a catastrophe due to decades of official corruption, incompetence, and criminal neglect in failing to properly build or maintain infrastructure, or prepare for such a predictable emergency. To the idiots of Florida (of hanging-chad fame), if you don’t like the weather and it can do, then MOVE TO SOMEWHERE MORE SENSIBLE!!!!
I have an idea, let’s put the entire nation on welfare.
That’s it, if you lose your job, you get on welfare. We can then convert abandoned McMansions and condo renovations into section 8 housing for everyone.
And we’ll use the proceeds from the food and coal exports to pay the dole bill.
Problem solved!