Ohh for sure. You see as companies(Boeing, Intel) cut and cut and cut and in effect gutted their ability to make what they promise, they also gutted the worker. The same way those companies processes used to have massive redundancies and robustness, and now have none. The workers lot fell in that same swoop. The rich funneled 50T from the middle class in the last 50 years. Now you're either rich or one calamity from broke. Fun world. Can't imagine why CEOs would get shot in the back in it. Total mystery. Definitely won't continue 🤷.
Good on you for mentioning it but it bears repeating: If you subsidize insurance in risky areas, you incentivize building in places that are more likely to be destroyed. Rates have to accurately reflect the cost of rebuilding.
@@BiggoSuave the only risk of open war was in the last 80 years Sovjet union / Russia Proxy wars, armament, etc Decmoission the 200+ military bases around the world and shro 10% of that money to Ukrain will help them defeat Russia and would be cheaper than maintaining the military complex that is obserdly oversized for the giant complex of the full NATO
Building a ton of homes in places like Florida which is in direct path of major hurricane activity is just a bad idea. There was a reason why the south was relatively undeveloped until the advent of the air conditioner. Now we are just realizing that there are other reasons why moving to certain places is a bad idea, notably hurricanes in Florida being a great example.
It is difficult to make exact projections for the housing market as it is still unclear how quickly or to what degree the Federal Reserve will reduce inflation and borrowing costs without having a substantial negative impact on demand from consumers for anything from houses to cars.
If anything, it'll get worse. Very soon, affordable housing will no longer be affordable. So anything anyone wants to do, I will advise they do it now because the prices today will look like dips tomorrow. Until the Fed clamps down even further, I think we're going to see hysteria due to rampant inflation. You can't halfway rip the band-aid off.
You're not doing anything wrong; you simply lack the expertise necessary to make money in a bad market. In these difficult circumstances, only really skilled experts who witnessed the 2008 financial crisis can expect to generate a large wage.
My CFA, Sophie Lynn Carrabus is a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.
Thanks for sharing, I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an e-mail shortly.
@@thebleaki yes and landlords can pass cost on to renters, owner occupied homes cannot… so higher insurance costs disproportionately impacts renters and homeowners, not real estate investors
@@Addahandletocontinue123 If only there was an alternative to making real estate an invesment tool or living under a land lord. if only some political theorist could compose a theory alternative to our current organization of the economy...
@@imaginater5238theory is a clownish waste of navel gazing time for folks that won’t act. If the ipad spinners had any backbone; they’d own investment property too, not cry over folks benefiting from providing a critical service
I think it’s really important that the federal government does not bail out states like Florida. They are going to legislate themselves into a housing crisis. And when they do, we can’t just hand them a pile of money with no strings attached.
@@petec6611 for real. It's disgusting to me how disaster aid in northern states takes much longer than disaster aid in southern states (such as Hurricane Katrina), because of politicians in hurricane states deciding to whine about the deficit when disaster aid doesn't benefit them.
Insurance agent in the state of Florida. Insurance will go higher and higher over the next few years not just due to storms but bad legislation, corporate greed, personal greed, fraud, lawsuits, inflation, corruption, and the cost of goods and services. Very nuanced topic, one I'd love to sit down and talk to outlets like MB on a more professional level.
@@Fjaloeat1 the news just throws out fake numbers acting like theyre a big deal. everything shows nature functions in cycles, and nothing has been out of the norm if you look at big picture
Florida is one of the dumbest states to move to. You need Air conditioning 9 months out of the year, hurricanes, rednecks, etc....and eventually everyone is going to move to the great lakes since Florida, Texas, etc...will all get too hot from global warming.
Our economy struggling with uncertainties, housing issues, foreclosures, global fluctuations, and pandemic aftermath, causing instability. Rising inflation, sluggish growth, and trade disruptions need urgent attention from all sectors to restore stability and stimulate growth
In particular, amid inflation, investors should exercise caution when it comes to their exposure and new purchases. It is only feasible to get such high yields during a recession with the guidance of a qualified specialist or reliable counsel.
37% of sellers dropped their prices in Denver over the last month?! Wow.....the crash in the mountain states is officially in motion. I guess people being called back to the office is a huge factor - the WH dream is over for most people.
I have several friends that live in Albuquerque, NM and home prices have increased 35-40% since 10/2020 and they are still going up! Also my niece lives outside Nashville and her house has increased in value by 4K in the past 2 weeks! When will this end?
It's a vicious cycle. If people can't afford homes, they might delay retirement savings, but if they focus solely on saving for retirement without considering their housing situation, they might miss out on potential investment opportunities.
Absolutely. And with the fear of not being able to retire comfortably, people might be tempted to make risky investments or neglect proper financial planning, which could spell trouble for their portfolios in the long run.
indeed, most people downplay the roles of financial planners until burnt by there mistakes. Productivity is optimized and keeping up to date strategies and analysis makes it more lucrative. I've been able to navigate the volatilities and scaled up 880k from 120k with professional guidance.
This made me think of the Strong Towns analysis of how towns sprawled and now can't pay for maintenance on utilities (water and sewage lines, electric, etc) reflected in new construction homes getting larger and larger and more costly to maintain in the future, both for literal maintenance and for premiums to cover the higher cost. Maybe time to consider building smaller homes (or even better more multi-family buildings).
Maybe that’s actually why Florida was built how it was. I’m from outside Daytona beach and in 92, most people I knew had smaller 3/2 cinderblock homes, and wetlands between neighboring towns. They’ve built 5/3 two houses all in these former low lying floodlands last visit
Yeah but even that only goes so far. Where I live in England, the vast majority of housing is in the form of terraced townhouses, duplexes & flats. And new houses the past 40 years have been getting smaller, not larger. Starter homes are typically around 700-950 square feet or 65-90 sqm, they're still unaffordable. Larger homes have actually come down in price because they're much more expensive to run & maintain, so you have downsizes competing with first time buyers driving the cost of smaller homes up. The only answer to this is more supply, but that's a project that takes a decade or more like half a generation to begin to address, not a single political term. And so long as the majority of voters are owners or on a mortgage, it benefits them (on paper) to keep house prices high.
Mortgage rates are currently at an all time high since 2000 (24 years) and based on statistics on inflation, we might see that number skyrocket further, a 30-year fixed rate was only 5% this time last year, so do I just keep waiting for a housing crash before buying or redirect my focus to the equity market
The stock market is no different, to maintain profit you need to have some in-depth knowledge on the market. I mostly just buy and hold stocks, but my portfolio has been mostly in the red for quite awhile now. Unfortunately to be able to make good gains, you’ll need to be consistent and restructure your portfolio frequently.
In my opinion, it was much easier investing back in the 80s but it’s a lot trickier now, those making consistent profit in these times are professionals reason I’ve been using an advisor for the past 5 years to consistently build my portfolio in preparations for retirement.
“Sharon Ann Meny” is her name. She is regarded as a genius in her area and works for Empower Financial Services. She’s quite known in her field, look-her up.
I love that governors who claim for less government are regulating th price of hknr insurance. The market demands higher insurance yet they're regulating it to be deflated. It hides the risks of moving to areas highly prone to flooding and wildfires.
So you think regulation should shoot up so that people can no longer afford their home insurance thus forcing them to lose their homes and upend their lives and probably never financially recover?
It's less government...for the things that they don't like. Always been that way. It's less government...when you want to claim the government is the reason for your easily brainwashed electorate's struggles.
In my opinion, a housing market crash is imminent due to the high number of individuals who purchased homes above the asking price despite the low interest rates. These buyers find themselves in precarious situations as housing prices decline, leaving them without any equity. If they become unable to afford their homes, foreclosure becomes a likely outcome. Even attempting to sell would not yield any profits. This scenario is expected to impact a significant number of people, particularly in light of the anticipated surge in layoffs and the rapid increase in the cost of living.
I suggest you offset your real estate and get into stocks, A recession as bad it can be, provides good buying opportunities in the markets if you’re careful and it can also create volatility giving great short time buy and sell opportunities too. This is not financial advise but get buying, cash isn’t king at all in this time!
Yeah, financial advisors could make a lot of difference, particularly in a market such as this. Stocks are pretty unstable at the moment, but if you do the right math, you should be just fine. Bloomberg and other finance media have been recording cases of folks gaining over 250k just in a matter of weeks/couple months, so I think there are a lot of wealth transfer in this downtime if you know where to look. I have been using an FA since 2020, and I return at least $30k ROI, and this does not include capital gain.
My CFA ANNETTE MARIE HOLT a renowned figure in her line of work. I recommend researching her credentials further... She has many years of experience and is a valuable resource for anyone looking to navigate the financial market..
One of the issues is that there hasn't been a free market for flood insurance. The National Flood Insurance Program (NFIP) has subsidized flood premiums since the 1960s with little regard for the true risk of flooding. For example, in 2017 Congress canceled (assumed) $16 billion of NFIP debt. Because of these subsidies, we now have trillions of dollars of homes built in flood-prone areas. Many of these homes have mortgages, and a particularly bad hurricane season could cause a selling panic and financial crisis. Banks won't issues mortgages without flood insurance. These flood-prone communities are not sustainable in the long run with the increasing frequency of storms.
@@blaydCA Sounds like people should stop building houses that flood so often.
Місяць тому
The 'Bama Boi wasn't too worried about _rising sea levels_ when he bought one of his Mansions on "Matha's" Vineyard, a reported 13' above sea level... the feds will bail him out if he gets wet.
A lot of the states most at risk have very low taxes and reduced labor protection. This makes it cheap to build homes, cheap to relocate businesses, and so you’re seeing massive population growth. But they were never pricing in the risk and it’s not the responsibility of states with less risk to subsidize. Rates should go up and these states need to raise taxes to start paying for infrastructure and other investments to mitigate climate changes. If it’s more expensive to live in Florida than Vermont. Good. The market is being efficient.
Here in Florida, the insurer will fight you down to the last penny, even when it is obviously their claim to cover. Many people only see 20% of their claim paid unless they hire a lawyer and fight it out for years. Insurers know most people can't afford this and so they wait them out. So, if you would only get $20k of a $100k claim paid when you pay $10k a year, if you don't have a claim for 2 years it's a push. If you go longer without a claim you make money off skipping a homeowners policy.
In a geography course I took 20 years ago we talked about exactly this problem. Climate change would change the severity of weather and make it hard to justify insuring properties in some areas.
@@MrLOLSager in theory if they can losen regulation to allow them to just deny more claims they can make significantly more money with more disasters until the economy collapses, but the free market has never focused on short term ganes to the complete detriment of society /s
I wouldn't count on corporate lobbyists to help anyone but themselves. Better to get rid of rules that chase insurance companies out of a region (to restore competition) and stop forcing them to sell policies they know won't be profitable (so rich people with seaside homes won't keep getting their coverage subsidized by the rest of us).
fear a housing crash due to people buying homes above asking prices with little equity. If prices drop, affordability and potential foreclosures may arise, worsened by future layoffs and rising living costs. I want to invest more than $300k, but I'm not sure on how to mitigate risk.
Contemplate shifting your investments from real estate to other dependable options such as stocks, cryptocurrencies, or precious metals. Severe recessions present potential buying opportunities in the market, but it's essential to approach them cautiously due to the volatility that can provide short-term trading possibilities. While not offering financial advice, it could be prudent to consider investing, given that holding onto cash may not be ideal during this period.
People often underestimate financial advisors' importance. Over 50 years of data reveal that those who work with advisors typically earn more than those who go it alone. I've been fortunate to work with one for 13 years, resulting in a $1 million portfolio, largely from early investments in AI and other growth stocks.
Certainly, there are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’Melissa Terri Swayne” for about five years now, and her performance has been consistently impressive.She’s quite known in her field, look-her up.
There's a good video on this titled, "Why We (Intentionally) Don't Build Tornado-Proof Homes". It boils down to low-friction finance and low-friction insurance. Even when you account for storm damage, it's cheaper to build with wood.
The person building the home has no financial incentive to use more expensive methods. The person buying the home is also unlikely to factor those things in and will choose something that costs less with similar space. A change in construction methods would require a federal program and Americans aren't likely to stomach that until it affects them personally.
It also seems like there is a lot of fraud going on. Contractors are paid by the insurance companies for repairs and insurers seem to have very little mechanisms in place to verify that the invoice for the repair is fair.
This doesn't cover the decrease in quality of construction recently as well, cheap houses don't last as long and carry higher risk. All materials are being purchased at lowest possible cost and a lot of run-down housing is not even old. It was just built as cheaply as possible. When I was on a committee to oversee an addition of the local elementary school, there were multiple conversations about the relationship between cinderblock construction and insurance rates.
When you local governments try to mandate a minimum quality of building & materials the members of that local government are called "Socialists"and kicked out of office. Then a 12 Story condominium complex collapses outside of Miami and everyone's wondering "what happened" and playing the "blame game"
You're both not wrong. It used to be a brick ranch home with a full basement, but now with the cost of land, builders need to get more houses in less space to turn a profit so instead of 1200 sq ft. Along the ground, it's spread out among 2 600 sq.ft floors. Instead of brick, it's plastic siding, and instead of old growth lumber, it's weak farmed lumber.
An extremely important caveat to all of this that's worth keeping in mind is that home and auto insurers are allowed to spend up to 40% of their profits on advertising, which is why these companies have some of the most prolific advertising campaigns. So when they're asking for a 30% hike to premiums, keep in mind that if they halved their advertising campaign they could actually lower their premiums
Many of the repairman seriously exaggerate the costs of roof insurance claims, at great expense to the homeowner and insurance companies. Someone should look into that.
It's not just the weather the building and permitting industry is OUT OF CONTROL! A roof used to be 3000.00 now it's 20,000 for a basic roof and drywall is ridiculous!!
Back in the day, when I purchased my first home to live-in; that was Miami in the early 1990s, first mortgages with rates of 8 to 9% and 9% to 10% were typical. People will have to accept the possibility that we won't ever return to 3%. If sellers must sell, home prices will have to decline, and lower evaluations will follow. Pretty sure I'm not alone in my chain of thoughts.
If anything, it'll get worse. Very soon, affordable housing will no longer be affordable. So anything anyone want to do, I will advise they do it now because the prices today will look like dips tomorrow. Until the Fed clamps down even further, I think we're going to see hysteria due to rampant inflation. You can't halfway rip the band-aid off.
consider moving your money from the housing market to financial markets or gold due to high mortgage rates and tough guidelines. Home prices may need to drop significantly before things stabilize. Seeking advice from a financial advisor who understands the market could be helpful in making the right decisions.
There are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’ Carol Vivian Constable” for about five years now, and her performance has been consistently impressive. She’s quite known in her field, look-her up.
I just looked her up on the internet and found her webpage with her credentials. I wrote her a outlining my financial objectives and planned a call with her.
1. we live where we can based on our jobs. I assure you, I'd not live in FL if I could. 2. maintenance, here's the issue, too many scammers out here just not doing the work as they should and just putting leans on your home. Its hard just get a good mechanic and trust to do the job. so even if I hire and check they are a licensed contractor... doesn't mean the job done is done well and I won't know how to tell if it is
Depth can be added here with a discussion of “float” in the insurance industry. While it’s true insurers aim to balance premiums and claims, their real profitability often comes from how they manage their float. The “float” refers to the money they hold from collected premiums before paying out claims. During this time, insurers invest that money in various assets, generating significant returns. This incentivizes insurers to delay payment on legitimate claims. Or even refuse to pay.
Oh it's even worse than that. Some of them have even sent innocent people to prison for doing nothing more than filing valid claims on their insurance. They didn't want to pay so they filed bogus fraud charges on the claimants. I suggest looking into what State Farm has been doing. State farm is involved with a whole host of illegal activities. Ranging from attempting to bribe a judge, send people to prison for filing valid claims, and bribing state DMV offices to alter vehicle titles. Farmers and countless other insurance companies are not much better. State Farm ended up in the spotlight with their activities.
Insurance companies may be paying out more in claims than they're collecting in premiums, but on the flip side, customers may be paying out more in premiums than they're collecting in claims...
Customers are supposed to pay more in premium than they collect in claims because insurance is a promise to cover a certain amount for specific covered losses. Insurance helps remove financial volatility for people who'd otherwise be unable to handle that volatility. If you don't want to pay in more than you get back then just don't get insurance and handle the volatility yourself. Insurance is a way to reduce your personal finance uncertainty, not be a net positive to your finances. That's what jobs are for.
When I built my home my insurer said its so safe I got all the discounts. Build with cement, no basement needed, use all electric no gas= very low fire risk, low flooding risk, low chance of storm damage easy repairs. Stay out of flood plains.
Time we recognize that housing is not an investment but a necessity. Insurance is a joke. It doesn’t matter if you have an insurance if you need to wait for your money days, weeks, months, years.
I bought a house with a roof less than 5 years old and when it leaked, I called insurance as one does and they said sorry, not covering it, also because you have a leaking roof, we are dropping you from coverage. Good luck finding another insurer to cover you, good bye.
Finding out insurers have insurers makes me feel like Mark Baum when he discovered synthetic CDO's. It not a matter of if, but when this flimsy pyramid collapses.
Maybe, just maybe, if they stop paying out for minor hail dings that do not do any real harm our rates would be reasonable. It blows my mind how we re roof using insurance having 90% plus roofs replaced using insurance money.
At 7:33 he talks about forgoing home insurance while failing to state that the only people that can forgoe insurance are those that own their own homes. These are most often wealthy people that can afford the risk. Its no surprise that as home owners insurance gets more expensive some people will choose not to buy it. The video appears to be poorly researched or even intentionally misleading.
I agree. He should have pointed out that if people are unable to cover their homes losses without insurance and cannot afford the insurance for the home that they are living beyond their means and need to downsize to a home they are able to afford. Consumers need to stop over extending themselves and live within their means.
So in a free market contest, people will move into regions that have lower environmental risks due to climate change. Which is the right thing to do I guess.
Did we watch the same video? That's literally the opposite of what people are doing. Free market cares most about what is happening next quarter, not what is good long-term.
@@razgriz2007 It's because of public insurance that people stay in the region under threat. And I am not saying that the free market is good. I am just saying that without State intervention people will migrate to less risky regions, which is a desired effect.
@@danielburke6479 People can just not repair their house after a climate disaster, accept the loss and move. Climate-induced migration is a real thing and explains in part why humanity did not stay in Africa.
Can we talk about how insane it is that people are still ignoring climate risks just to live in popular areas? Some things are clearly not built to last!
There are no dumb questions. Yes, if home prices do not rise then it would help from insurers perspective since it would be limiting the loss claims in volumes in total even if risk frequency continues to grow. On the other hand if the established trend from the last decades of home prices going upwards was financially assumed to continue in the mortgages, then this might lead to banks re-evaluating the provided guarantees (which is normally the purchased home) and start asking the owners to provide some other assets as guarantee to secure themselves.
i think we have to tax GHG emissions across the board to mitigate the future damage from anthropogenic climate change, change our local zoning to permit building with stone and masonry materials, and change our tax system from property taxes to land taxes so that we density our cities and further reduce climate change.
My mom canceled her home ins policy after they almost 10x her premium per year, can't blame her. If I owned here in CO I'd at least have a roof exclusion on the policy the re-roofing every single hail storm has gotten ridiculous
Can't do that if you have a mortgage. I'd love to do that too, but at 2.25% mortgage, why would pay off my house to save on the premium? Location matters here. Are we talking about 2K a year or 12K a year? For the latter, yeah I'd have the balance of my mortgage paid TWICE, which obviously warrants getting rid of insurance. I'd pay off my mortgage at that point.
Another reason people are moving towards higher risk places is because those are the places that are actually allowing housing to be built, so the cost of homeownership there is less.
He mentions this problem. It is encouraged by the government because they allow houses being built even though they cannot be insured. And builders will look the other way because they are just in it to get money.
Goodbye to single family dwellings in american suburbia. A a lot of the new ones are made out of cardboard anyway. Time for smarter housing decisions. More affordable housing made with better materials and planned based on local topography instead of cookie cutter idiocy, with higher density too
I live in a high fire risk area. No insurance company will even sell me insurance. I could go through a State program, but that's way too expensive, and it's just basic fire... no homeowner's insurance option. I've had to live this way for 15 years, and came pretty close to having my house catch fire three years ago when a neighbor's home literally exploded while he was trying to start his generator during a power outage. I'm way too old to start over, but that's life...
amazing video! great rundown on the current housing market and the rippling effects that insurance has on new and current homes cost. Thank you for the good work!
Not precisely. Home values increasing drastically usually mean the ground underneath the structure has appreciated. Structures depreciate over time. Home insurance is based more on improvement value. If your property value doubles in 5 years, but you haven't increased the value of property improvements, your insurance shouldn't go up very much unless the cost of labor and materials has drastically increased.
@@randxalthorno because the if the home values doubles then the land value would go up by 5 times assuming the property part did appreciate but that’s not the case besides that would encourage tons of people to build homes
Home value and the cost of rebuilding aren't necessarily the same. Sometimes you need to have insurance for hundreds of thousands of dollars more than what the home is worth.
This is one thing that trickle down actually shows up,. It also affects utilities and all small businesses that have little choice but to raise prices to cover insurance hikes. On and on.🤔
For those that don’t understand why health insurance costs so much, same reason but replace bad weather, with smoking, alcohol, sugar, ultra-high processed foods, and sedentary lifestyles mixed with not enough people paying in…
These stats come from the insurance companies. How are they still in business? They still have a payroll to meet. CEO’s and board members have to be compensated to the tune of millions.
They are for-profit companies that are publicly traded. Pretty sure they will abandon a market if they know the risk is too high for year over year losses.
So glad to see someone talking about home insurance. We lost ours about a year ago and the company made very little attempts to reach us. Basically a call and a letter, we didn't get either and the call we probably thought was about car insurance as our daughter had just got her license and Nationwide was having trouble adding her. So come February we didn't know we lost our insurance which we need cause our mortgage requires it. Our cost went up we're with a more unknown company etc etc we got a broker and she said she's never seen it this bad. Large insurance companies are actively looking for reasons to remove people.
Moved from Maryland to upstate new York at the start of the year, and experienced what everyone described as the most mild winter they have ever seen, followed by the biggest summer storms they have ever seen. The winter being mild? OK i'm used to mild winters, so that didn't hit me as hard. But the summers? TORNADOS in upstate a few cities over actually knocking down buildings? Me driving home and seeing an actual small tornado forming over lake Ontario? Now THAT was scary. Maryland has strong August storms, but they never really scared me like the storms of this summer up here with actual damage, not to mention there was also damage back in Maryland from similar sized storms. With my dad trying to spend more time in Florida but his trips being delayed cause of storms, and my vacation spot in Western North Carolina almost getting destroyed by Hurricane Helene, and the cost of housing... I'm not sure what to do as a 23 year old looking to buy a house in the next few years. I'm already not having kids cause of all the risks involved, can I at least have a place to live? Hopefully insurance profit incentives will decrease. If a.. recent event involving a healthcare CEO is anything to show how done people are with it.
Yep, we’re all standing by on the west coast to buy up all the already cheap houses in middle America when they’re discounted by another 50-70% with the loss of insurance. There’s just tons of cash ready to pounce on self-insured rentals. Going to be an interesting decade or two ahead.
I had to leave a fairly high paying job recently in the insurance industry. I only ever handled catastrophe claims and saw the writing on the wall a few years ago. Everyone I worked with could feel the change in workload from just a few years ago. I’ve honestly never had a more stressful job.
Interesting. As someone in Michigan, we tend to be viewing our weather and climate as, in fact, getting more mild. A state that once received many many feet of snow in winter now doesn’t get snow days and rarely has snow on Christmas. Our insurance rates have been noticeably higher, but that seems to be from lobbying and legislation. There’s a law firm I know that’s been working to collect testimony from citizens who were impacted by a million$+ private payout to Whitmer by insurance companies, which increased rates and decreased coverage. We also suffer from our tax and toll structure which doesn’t collect from freight which means freight goes on any road with as much weight as they want, ruining roads and making neighborhoods less safe to walk. The sentiment from citizens tends to be that the faults of Michigan are entirely from terrible leadership for a long time. Lack of sustainable industry. Lack of infrastructure. Lack of education investment. Lack of city planning - were completely starved of any walkable cities. Our climate and our rural life is the one thing we cling to.
Fantastic. Can’t imagine anything better than insurance companies losing money. It’s already hard enough getting them to pay out when people literally PAY THEM TO GIVE THEM COVERAGE WHEN THEY NEED ACTUALLY NEED IT
Home prices are up 50% since 2020. Since insurance has to replace the value of the home, and insurance premiums are up *only* 35% that is a 15% gap between the increase in home prices and insurance premiums. The weather doesn't need to be more extreme for that to be causing a problem. Many of the states seeing insurers leave have laws that limit the maximum rate at which insurance premiums can rise.
Back in the day, we had a thing called fire insurance in America. There would be competing fire stations in each town and would only put out fires on houses insured by the fire station. No insurance? No one would try to put out the fire. Rich people would buy insurance with all stations to get priority in the fire being put out on their homes. A couple decades later, we have socialized fire stations. We pay taxes and collectively pay them for protection via taxes. Collectively paying for fire insurance via taxes is cheaper than us individually paying for fire insurance. Collectively paying taxes for health insurance and for home insurance would be dramatically cheaper than individually paying for these services.
While you're right, it would also incentivise to keep building in more risk people locations that perhaps shouldn't be built in. Though that's very case to case.
Except you are completely wrong... Health insurance is socialized and its costs are still through the roof. Whats worse? Is that the 'free' coverage has a hard upper limit. Which means that if you make a dollar more than the cap (say 25,000), you will now have to pay for health insurance on your own. And the exhorbinate fees actually bring you LOWER than when you didn't qualify for free insurance. The problem with socialized healthcare is that 1. People dont feel responsible for their health cause they get free healthcare. 2. Insurance companies collect bank cause they basically have a GAURUNTEED customer base. 3. If the gov does not pay enough, the insurance can just put the costs onto the PREMUIM payers. Which is why my dad is paying 7,500 a year on just the payments and then still has to pay out of pocket for whatever he gets.
@@Xenozillexyou sound like ChatGPT. Just because you have access to medical care doesn't mean you won't take care of your own health. That simply doesn't follow. The main issue in the US is that hospitals overcharge. It's as simple as that. They have the charge master with sky high prices(that's how you get $50 bandaids, no exaggeration) , then they have insurance negotiated prices, and then there's the price for everyone else - that can get negotiated down massively if you don't accept the first bill. Actually socialized health care brings price down. And I'm not just talking insurance, I'm talking about public hospitals, either at the state or federal level. Indeed, if you just pay whatever private hospitals want, single payer doesn't fix the issue. But if you have government run, even if only for serious cases, you place a cap on how much the rest of the system can try to charge you. You just have to look into how health care is run in other countries. And I mean really look, not just take some sentences that corroborate your own viewpoint.
@@Outworlder chatgpt isn't anti-gov as I am. First, has the cost of healthcare lowered or risen since Obamacare? You know what Obamacare is, right? America's attempt at (expanding) socialized healthcare. Second, have you considered, just for a second, that 'other' countries already have a higher tax rate than us? Do you seriously look at your paycheck and go 'I think the gov needs to take even more.' Or, maybe you don't work. Which would be consistent with your pro-gov expansion beliefs.
This is because insurance isn't supposed to be a "payment plan." I have a high cost of hail damage in my area, so instead of a "rare event" it's really just something you need to plan for. I take the insurance for hail off my house and I plan accordingly.
People need to call their insurance companies too. Insurance companies love selling you more coverage than you need. I hade a $675,000 replacement plan. I just changed it to $500,000. If my house burns down I will just sell the land and buy a different one with money from the land and insurance pay out. Removing that $175k extra kept my insurance rates the same.
Most people have mortgages. You CANNOT opt for partial replacement cost with the insurer when you have a mortgage, you have to bind coverage for the full replacement cost as their appraisers deem the full cost to be. Sure, if you don't have a mortgage you don't even have to carry insurance (it'd be pretty dumb to not at least carry liability only, given it's pretty cheap).
Personal opinion.. Laws should be made that require "insurance companies" to meet at least 75% pay out claims. They can increase rates as much as needed as long as they are at least paying out 75% to claims. 15% should be allowed to cover operating costs and max of 10% for profit margin. Excess unpaid insurance should be returned to policy holders every year. This should cover all insurance.. medical, vehicle, home, etc..
Housing prices are unlikely to significantly decrease until there's a substantial increase in housing supply. In the USA , there's a shortage of millions of housing units, and construction isn't keeping pace. The constant demand for housing, coupled with population growth, means that even a slight price drop attracts numerous buyers who quickly absorb the available supply. I'm considering purchasing affordable houses in 2025 and possibly venturing into stock investments. When is the best time to enter the stock market? Some people say it is profitable , but others say it's risky. Any advice?
Consider investing in stocks especially during a recession . While recessions can be tough, they can also offer good chances to buy low and sell high in the markets if you're cautious. Just remember, this is not financial advice, but it's a good time to think about buying stocks since having cash on hand isn't always the best option.
Credits goes to " Annette Christine Conte" one of the finest portfolio managers in the field. She's widely recognized; you should take a look at her work.
One of the things you didn’t mention is the soaring cost of reinsurance costs burdening down primary insurance. In Florida rates for reinsurance went up like 50% and in Louisiana many RI won’t even take you
The housing crisis will self correct. The reality is our population is decreasing at an alarming rate. This will lead to more homes than people. Yet, this is likely a problem for our kids or more likely whatever grandchildren are around.
I'm a tabletop Wargamer, and risk is kinda the light weight version of my type of strategy game. I play often, haven't lost in years. Always go for south America first, while attempting the block of your opponent getting the other one. Depending on where they went, either go for north America or Africa second, then push in for all of Asia. Once taking that, you can easily take the rest of the nap.
Easy solution: Insurance companies need to put a premium policy cap on the damages assessed based on the networth of the individual & the cost of the house. Removing "expensive" real-estate from the equation would effectively change "how much" they would need to spend within the policy, and in particular, stop covering costs in places like Florida, where it's becoming a "choice" to live there, despite the constant weather problems. Only raising their premiums, not everywhere else, would fix that problem. Lower premium costs in areas where "natural disasters" aren't ripping your house in half, and increase premiums in areas you're more likely to experience your roof being ripped off from a hurricane that's about to flood your street so bad that every car now has flood damage.
Um, he left out a critical piece of information at 0:23 He incorrectly stated insurers are paying out more in claims than premiums but his slide shows that its actually claims + expenses divided by premiums. Like a nonprofit an insurance company can do nearly anything it wants with its revenue. If they wany to show a cost ratio over 100 they could just pay the employees more (an expense). How could he ignore this? Macy would never miss this.
The housing market in the US is so Fd up. 30y mortgages are also Fd up, property values adjusted to those mortgages and now a 5y mortgage is out of the question. If you finance you’re forced to have insurance and the only way to safely forgo insurance is building sturdier homes but that also inflates the price of construction increasing the price of the property. And if you want to build your own home to forgo insurance and financing altogether, there’s a ridiculous amount of red tape. Good luck america 😂😂😂
Home insurance market is broken. The problem started in Florida but it has since spread to California, the Carolinas, and many other states. We need a national insurance program that covers damage caused by weather, with the US Treasury as the reinsurer.
Scientists have been screaming about the effects of climate change for decades. Frankly, this is in large part the result of willful ignorance. I only feel empathy for those too poor to move.
Higher prices are not just due to "more bad weather." Inflation is the biggest culprit. If the rate of property damage remains the same, the cost of repair (materials and labor) still rises due to inflation. Also, housing inflation hits property taxes exactly the same way for exactly the same reason. Property tax rates are stable, but people are paying more for taxes.
insurance companies make most of their money from investing the premiums. they still make plenty or money if they pay out more than they take in premiums
Most “middle class” in the US are just one unemployment, one health crisis, or one natural disaster away from total financial ruins.
All part of the plan
Got to build that emergency fund and invest in the stock market
In other words they have a JOB. Just Above Broke.
I've been trying to explain this to my wife. Sad reality.
Ohh for sure. You see as companies(Boeing, Intel) cut and cut and cut and in effect gutted their ability to make what they promise, they also gutted the worker. The same way those companies processes used to have massive redundancies and robustness, and now have none. The workers lot fell in that same swoop. The rich funneled 50T from the middle class in the last 50 years. Now you're either rich or one calamity from broke. Fun world. Can't imagine why CEOs would get shot in the back in it. Total mystery. Definitely won't continue 🤷.
Good on you for mentioning it but it bears repeating: If you subsidize insurance in risky areas, you incentivize building in places that are more likely to be destroyed. Rates have to accurately reflect the cost of rebuilding.
FEMA should be sued for underestimating the risk in the west NC area. The maps need to be reasonably accurate
Yep. For sure. This is a real problem.
Nah, they’d rather throw money at Ukraine
@@BiggoSuave the only risk of open war was in the last 80 years Sovjet union / Russia
Proxy wars, armament, etc
Decmoission the 200+ military bases around the world and shro 10% of that money to Ukrain will help them defeat Russia and would be cheaper than maintaining the military complex that is obserdly oversized for the giant complex of the full NATO
Building a ton of homes in places like Florida which is in direct path of major hurricane activity is just a bad idea. There was a reason why the south was relatively undeveloped until the advent of the air conditioner. Now we are just realizing that there are other reasons why moving to certain places is a bad idea, notably hurricanes in Florida being a great example.
It is difficult to make exact projections for the housing market as it is still unclear how quickly or to what degree the Federal Reserve will reduce inflation and borrowing costs without having a substantial negative impact on demand from consumers for anything from houses to cars.
If anything, it'll get worse. Very soon, affordable housing will no longer be affordable. So anything anyone wants to do, I will advise they do it now because the prices today will look like dips tomorrow. Until the Fed clamps down even further, I think we're going to see hysteria due to rampant inflation. You can't halfway rip the band-aid off.
You're not doing anything wrong; you simply lack the expertise necessary to make money in a bad market. In these difficult circumstances, only really skilled experts who witnessed the 2008 financial crisis can expect to generate a large wage.
Could you kindly elaborate on the advisor's background and qualifications?
My CFA, Sophie Lynn Carrabus is a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.
Thanks for sharing, I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an e-mail shortly.
Maybe making the houses a financial investment is not the good idea they all thought it was going to be
You think rental housing is not exposed to cost increases from higher insurance premiums?
@@Addahandletocontinue123 Rental housing is still a form of housing as a financial investment, I'm not sure you're making the point you think you are?
@@thebleaki yes and landlords can pass cost on to renters, owner occupied homes cannot… so higher insurance costs disproportionately impacts renters and homeowners, not real estate investors
@@Addahandletocontinue123 If only there was an alternative to making real estate an invesment tool or living under a land lord. if only some political theorist could compose a theory alternative to our current organization of the economy...
@@imaginater5238theory is a clownish waste of navel gazing time for folks that won’t act. If the ipad spinners had any backbone; they’d own investment property too, not cry over folks benefiting from providing a critical service
I think it’s really important that the federal government does not bail out states like Florida. They are going to legislate themselves into a housing crisis. And when they do, we can’t just hand them a pile of money with no strings attached.
They absolutely will bail out states though.
yeah but florida just won the federal election so that absolutely won't happen. Red states love collecting federal subsidies
This! Also, Florida especially who only supports disaster aid for themselves.
@@petec6611 for real. It's disgusting to me how disaster aid in northern states takes much longer than disaster aid in southern states (such as Hurricane Katrina), because of politicians in hurricane states deciding to whine about the deficit when disaster aid doesn't benefit them.
@@petec6611 and votes for politicians that deny climate change and remove enviromental protections
Insurance agent in the state of Florida. Insurance will go higher and higher over the next few years not just due to storms but bad legislation, corporate greed, personal greed, fraud, lawsuits, inflation, corruption, and the cost of goods and services. Very nuanced topic, one I'd love to sit down and talk to outlets like MB on a more professional level.
Do you think Climate cha- I mean, Systemically altering weather patterns are going to make insurance more expensive as time goes on?
@@Fjaloeat1 the news just throws out fake numbers acting like theyre a big deal. everything shows nature functions in cycles, and nothing has been out of the norm if you look at big picture
@@Fjaloeat1not that but actual climate change will.
@@Fjaloeat1 "Systemically altering weather patterns" - I love this! LOL
Florida is one of the dumbest states to move to. You need Air conditioning 9 months out of the year, hurricanes, rednecks, etc....and eventually everyone is going to move to the great lakes since Florida, Texas, etc...will all get too hot from global warming.
Our economy struggling with uncertainties, housing issues, foreclosures, global fluctuations, and pandemic aftermath, causing instability. Rising inflation, sluggish growth, and trade disruptions need urgent attention from all sectors to restore stability and stimulate growth
In particular, amid inflation, investors should exercise caution when it comes to their exposure and new purchases. It is only feasible to get such high yields during a recession with the guidance of a qualified specialist or reliable counsel.
This aligns perfectly with my desire to organise my finances prior to retirement. Could you provide me with access to your advisor??
She appears to be well-educated and well-read. I ran an online search on her name and came across her website; thank you for sharing.
So capitalism is not all it’s cracked up to be
Growth is unsustainable, infinite growth while population is about to go negative is such a bad thing to focus on.
37% of sellers dropped their prices in Denver over the last month?! Wow.....the crash in the mountain states is officially in motion. I guess people being called back to the office is a huge factor - the WH dream is over for most people.
I have several friends that live in Albuquerque, NM and home prices have increased 35-40% since 10/2020 and they are still going up! Also my niece lives outside Nashville and her house has increased in value by 4K in the past 2 weeks! When will this end?
It's a vicious cycle. If people can't afford homes, they might delay retirement savings, but if they focus solely on saving for retirement without considering their housing situation, they might miss out on potential investment opportunities.
Absolutely. And with the fear of not being able to retire comfortably, people might be tempted to make risky investments or neglect proper financial planning, which could spell trouble for their portfolios in the long run.
Consulting with a financial professional can provide personalized insights and help align your investment strategy with your retirement goals.
indeed, most people downplay the roles of financial planners until burnt by there mistakes. Productivity is optimized and keeping up to date strategies and analysis makes it more lucrative. I've been able to navigate the volatilities and scaled up 880k from 120k with professional guidance.
This made me think of the Strong Towns analysis of how towns sprawled and now can't pay for maintenance on utilities (water and sewage lines, electric, etc) reflected in new construction homes getting larger and larger and more costly to maintain in the future, both for literal maintenance and for premiums to cover the higher cost. Maybe time to consider building smaller homes (or even better more multi-family buildings).
Maybe that’s actually why Florida was built how it was. I’m from outside Daytona beach and in 92, most people I knew had smaller 3/2 cinderblock homes, and wetlands between neighboring towns. They’ve built 5/3 two houses all in these former low lying floodlands last visit
You have to tear down zoning laws for that. Good luck with the NIMBY crowd.
@@jasminewilliams1673I'm from the Midwest, what does 3/2 and 5/3 mean? Thanks
Yeah but even that only goes so far.
Where I live in England, the vast majority of housing is in the form of terraced townhouses, duplexes & flats. And new houses the past 40 years have been getting smaller, not larger.
Starter homes are typically around 700-950 square feet or 65-90 sqm, they're still unaffordable. Larger homes have actually come down in price because they're much more expensive to run & maintain, so you have downsizes competing with first time buyers driving the cost of smaller homes up.
The only answer to this is more supply, but that's a project that takes a decade or more like half a generation to begin to address, not a single political term. And so long as the majority of voters are owners or on a mortgage, it benefits them (on paper) to keep house prices high.
@@mtoohill 3 bed 2 bath and 5 bedroom 3 bath homes (two story) are now expected
Mortgage rates are currently at an all time high since 2000 (24 years) and based on statistics on inflation, we might see that number skyrocket further, a 30-year fixed rate was only 5% this time last year, so do I just keep waiting for a housing crash before buying or redirect my focus to the equity market
The stock market is no different, to maintain profit you need to have some in-depth knowledge on the market. I mostly just buy and hold stocks, but my portfolio has been mostly in the red for quite awhile now. Unfortunately to be able to make good gains, you’ll need to be consistent and restructure your portfolio frequently.
In my opinion, it was much easier investing back in the 80s but it’s a lot trickier now, those making consistent profit in these times are professionals reason I’ve been using an advisor for the past 5 years to consistently build my portfolio in preparations for retirement.
My partner’s been considering going the same route, could you share more info please on the advisor that guides you
“Sharon Ann Meny” is her name. She is regarded as a genius in her area and works for Empower Financial Services. She’s quite known in her field, look-her up.
Thanks a lot for this suggestion. I needed this myself, I looked her up, and I have sent her an email. I hope she gets back to me soon.
I love that governors who claim for less government are regulating th price of hknr insurance. The market demands higher insurance yet they're regulating it to be deflated.
It hides the risks of moving to areas highly prone to flooding and wildfires.
So you think regulation should shoot up so that people can no longer afford their home insurance thus forcing them to lose their homes and upend their lives and probably never financially recover?
Worse, it shunts the cost of irresponsible building and climate costs onto those who didn't cause them
Florida does not have income tax, so I would imagine property taxes are its main source of income.
It's less government...for the things that they don't like. Always been that way. It's less government...when you want to claim the government is the reason for your easily brainwashed electorate's struggles.
In my opinion, a housing market crash is imminent due to the high number of individuals who purchased homes above the asking price despite the low interest rates. These buyers find themselves in precarious situations as housing prices decline, leaving them without any equity. If they become unable to afford their homes, foreclosure becomes a likely outcome. Even attempting to sell would not yield any profits. This scenario is expected to impact a significant number of people, particularly in light of the anticipated surge in layoffs and the rapid increase in the cost of living.
I suggest you offset your real estate and get into stocks, A recession as bad it can be, provides good buying opportunities in the markets if you’re careful and it can also create volatility giving great short time buy and sell opportunities too. This is not financial advise but get buying, cash isn’t king at all in this time!
Yeah, financial advisors could make a lot of difference, particularly in a market such as this. Stocks are pretty unstable at the moment, but if you do the right math, you should be just fine. Bloomberg and other finance media have been recording cases of folks gaining over 250k just in a matter of weeks/couple months, so I think there are a lot of wealth transfer in this downtime if you know where to look. I have been using an FA since 2020, and I return at least $30k ROI, and this does not include capital gain.
@@JamesDinsdale-e6q I’ve been looking to switch to an advisor for a while now. Any help pointing me to who your advisor is?
My CFA ANNETTE MARIE HOLT a renowned figure in her line of work. I recommend researching her credentials further... She has many years of experience and is a valuable resource for anyone looking to navigate the financial market..
Found her, I wrote her an email and scheduled a call, hopefully she responds, I plan to start 2025 on a woodnote financially.
One of the issues is that there hasn't been a free market for flood insurance. The National Flood Insurance Program (NFIP) has subsidized flood premiums since the 1960s with little regard for the true risk of flooding. For example, in 2017 Congress canceled (assumed) $16 billion of NFIP debt. Because of these subsidies, we now have trillions of dollars of homes built in flood-prone areas. Many of these homes have mortgages, and a particularly bad hurricane season could cause a selling panic and financial crisis. Banks won't issues mortgages without flood insurance. These flood-prone communities are not sustainable in the long run with the increasing frequency of storms.
Once upon a time, there was flood insurance.
Losses were too great, so insurance companies stopped offering it.
How would one issue subsidies with regard to risks, since that's the fulcrum of your point
@@blaydCAyou skipped a step "consumer not wanting to pay the adjusted price"
@@blaydCA Sounds like people should stop building houses that flood so often.
The 'Bama Boi wasn't too worried about _rising sea levels_ when he bought one of his Mansions on "Matha's" Vineyard, a reported 13' above sea level... the feds will bail him out if he gets wet.
My plan to avoid insurance costs is to never be able to afford a home
A lot of the states most at risk have very low taxes and reduced labor protection. This makes it cheap to build homes, cheap to relocate businesses, and so you’re seeing massive population growth.
But they were never pricing in the risk and it’s not the responsibility of states with less risk to subsidize.
Rates should go up and these states need to raise taxes to start paying for infrastructure and other investments to mitigate climate changes.
If it’s more expensive to live in Florida than Vermont. Good. The market is being efficient.
Here in Florida, the insurer will fight you down to the last penny, even when it is obviously their claim to cover. Many people only see 20% of their claim paid unless they hire a lawyer and fight it out for years. Insurers know most people can't afford this and so they wait them out. So, if you would only get $20k of a $100k claim paid when you pay $10k a year, if you don't have a claim for 2 years it's a push. If you go longer without a claim you make money off skipping a homeowners policy.
we're dealing with this right now. Our repair was 5k. They paid out 3k
That might be the case but they are still losing money overall
Their only job is to evaluate and price risk. They did their job poorly, and are still (in Florida) profiting.... not shedding a tear
I pay 500 a year in the Midwest. Time to move bud.
You forgot to mention, how they now paying the CEO's millions of dollars every year, back a few deades ago it was only maybe $200K a year.
Truth. Their greed is driving everything.
In a geography course I took 20 years ago we talked about exactly this problem. Climate change would change the severity of weather and make it hard to justify insuring properties in some areas.
So insurance companies should lobby for sustainability measures to reduce this change?
Isn't that the obvious solution?
@@MrLOLSager in theory if they can losen regulation to allow them to just deny more claims they can make significantly more money with more disasters until the economy collapses, but the free market has never focused on short term ganes to the complete detriment of society /s
Some are, i've participated in climate events funded by insurance-having banks.
But they tend to be boring, talk-heavy corporate affairs.
I wouldn't count on corporate lobbyists to help anyone but themselves. Better to get rid of rules that chase insurance companies out of a region (to restore competition) and stop forcing them to sell policies they know won't be profitable (so rich people with seaside homes won't keep getting their coverage subsidized by the rest of us).
We're still struggling (and failed again) to get someone in the white house that believes climate change is real. Drill baby drill.
Thanks for shedding a light on what is going to be an increasingly important topic in the coming decades!
fear a housing crash due to people buying homes above asking prices with little equity. If prices drop, affordability and potential foreclosures may arise, worsened by future layoffs and rising living costs. I want to invest more than $300k, but I'm not sure on how to mitigate risk.
Contemplate shifting your investments from real estate to other dependable options such as stocks, cryptocurrencies, or precious metals. Severe recessions present potential buying opportunities in the market, but it's essential to approach them cautiously due to the volatility that can provide short-term trading possibilities. While not offering financial advice, it could be prudent to consider investing, given that holding onto cash may not be ideal during this period.
People often underestimate financial advisors' importance. Over 50 years of data reveal that those who work with advisors typically earn more than those who go it alone. I've been fortunate to work with one for 13 years, resulting in a $1 million portfolio, largely from early investments in AI and other growth stocks.
I’ve been looking to switch to an advisor for a while now. Any help pointing me to who your advisor is?
Certainly, there are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’Melissa Terri Swayne” for about five years now, and her performance has been consistently impressive.She’s quite known in her field, look-her up.
I copied her whole name and pasted it into my browser; her website appeared immediately, and her qualifications are excellent; thank you for sharing.
what I don't get is why there is no push to change construction methods? like more use of bricks, concrete etc like in other parts of the world
There's a good video on this titled, "Why We (Intentionally) Don't Build Tornado-Proof Homes". It boils down to low-friction finance and low-friction insurance. Even when you account for storm damage, it's cheaper to build with wood.
The person building the home has no financial incentive to use more expensive methods. The person buying the home is also unlikely to factor those things in and will choose something that costs less with similar space. A change in construction methods would require a federal program and Americans aren't likely to stomach that until it affects them personally.
As someone who builds with masonry every day we already have more work then we can do and finding more people to do it is nearly impossible.
Another factor is that concrete is bad for the environment. Wood is good because it’s a carbon sink.
It also seems like there is a lot of fraud going on. Contractors are paid by the insurance companies for repairs and insurers seem to have very little mechanisms in place to verify that the invoice for the repair is fair.
I've seen job postings for Private investigators who stalk health insurance claimers... Maybe they need one for the construction as well.
This doesn't cover the decrease in quality of construction recently as well, cheap houses don't last as long and carry higher risk. All materials are being purchased at lowest possible cost and a lot of run-down housing is not even old. It was just built as cheaply as possible.
When I was on a committee to oversee an addition of the local elementary school, there were multiple conversations about the relationship between cinderblock construction and insurance rates.
When you local governments try to mandate a minimum quality of building & materials the members of that local government are called "Socialists"and kicked out of office.
Then a 12 Story condominium complex collapses outside of Miami and everyone's wondering "what happened" and playing the "blame game"
Start a construction company then.
You're both not wrong. It used to be a brick ranch home with a full basement, but now with the cost of land, builders need to get more houses in less space to turn a profit so instead of 1200 sq ft. Along the ground, it's spread out among 2 600 sq.ft floors. Instead of brick, it's plastic siding, and instead of old growth lumber, it's weak farmed lumber.
An extremely important caveat to all of this that's worth keeping in mind is that home and auto insurers are allowed to spend up to 40% of their profits on advertising, which is why these companies have some of the most prolific advertising campaigns. So when they're asking for a 30% hike to premiums, keep in mind that if they halved their advertising campaign they could actually lower their premiums
Yup people keep misinterpreting the industry they make it seem so altruistic when they explain it but it isn't 😂
Such a good point that doesn't come up enough when people are being sold the dream of home ownership.
Many of the repairman seriously exaggerate the costs of roof insurance claims, at great expense to the homeowner and insurance companies. Someone should look into that.
Your profile picture looks like the commenter above (@PASH3227) you grew up
It's not just the weather the building and permitting industry is OUT OF CONTROL! A roof used to be 3000.00 now it's 20,000 for a basic roof and drywall is ridiculous!!
Still crazy that people move and buy in Florida even though thats essentially throwing your money into the ocean.
Back in the day, when I purchased my first home to live-in; that was Miami in the early 1990s, first mortgages with rates of 8 to 9% and 9% to 10% were typical. People will have to accept the possibility that we won't ever return to 3%. If sellers must sell, home prices will have to decline, and lower evaluations will follow. Pretty sure I'm not alone in my chain of thoughts.
If anything, it'll get worse. Very soon, affordable housing will no longer be affordable. So anything anyone want to do, I will advise they do it now because the prices today will look like dips tomorrow. Until the Fed clamps down even further, I think we're going to see hysteria due to rampant inflation. You can't halfway rip the band-aid off.
consider moving your money from the housing market to financial markets or gold due to high mortgage rates and tough guidelines. Home prices may need to drop significantly before things stabilize. Seeking advice from a financial advisor who understands the market could be helpful in making the right decisions.
I will be happy getting assistance and glad to get the help of one, but just how can one spot a reputable one?
There are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’ Carol Vivian Constable” for about five years now, and her performance has been consistently impressive. She’s quite known in her field, look-her up.
I just looked her up on the internet and found her webpage with her credentials. I wrote her a outlining my financial objectives and planned a call with her.
1. we live where we can based on our jobs. I assure you, I'd not live in FL if I could. 2. maintenance, here's the issue, too many scammers out here just not doing the work as they should and just putting leans on your home. Its hard just get a good mechanic and trust to do the job. so even if I hire and check they are a licensed contractor... doesn't mean the job done is done well and I won't know how to tell if it is
Depth can be added here with a discussion of “float” in the insurance industry.
While it’s true insurers aim to balance premiums and claims, their real profitability often comes from how they manage their float. The “float” refers to the money they hold from collected premiums before paying out claims. During this time, insurers invest that money in various assets, generating significant returns. This incentivizes insurers to delay payment on legitimate claims. Or even refuse to pay.
So glad I stopped using plastic straws, that’ll definitely solve this problem.
😂
Tampa, FL could've easily built their city Like Tropical Asian city. Singapore, Malaysia, Thailand all experience this weather and are still standing
I will never feel sorry for Insurancd compannies. They don't deserve pity. They deny billions more claims than they ever pay out.
I mean its still legislated and organized so that when they go under it absolutely will be your problem too...
Oh it's even worse than that. Some of them have even sent innocent people to prison for doing nothing more than filing valid claims on their insurance. They didn't want to pay so they filed bogus fraud charges on the claimants. I suggest looking into what State Farm has been doing. State farm is involved with a whole host of illegal activities. Ranging from attempting to bribe a judge, send people to prison for filing valid claims, and bribing state DMV offices to alter vehicle titles. Farmers and countless other insurance companies are not much better. State Farm ended up in the spotlight with their activities.
Let’s completely ignore climate change and vote for a president denying it
Insurance companies may be paying out more in claims than they're collecting in premiums, but on the flip side, customers may be paying out more in premiums than they're collecting in claims...
Customers are supposed to pay more in premium than they collect in claims because insurance is a promise to cover a certain amount for specific covered losses. Insurance helps remove financial volatility for people who'd otherwise be unable to handle that volatility. If you don't want to pay in more than you get back then just don't get insurance and handle the volatility yourself. Insurance is a way to reduce your personal finance uncertainty, not be a net positive to your finances. That's what jobs are for.
Gosh, you’d think climate scientists would have warned us about this and an entire political party wouldn’t deny the root of the problem
When I built my home my insurer said its so safe I got all the discounts. Build with cement, no basement needed, use all electric no gas= very low fire risk, low flooding risk, low chance of storm damage easy repairs. Stay out of flood plains.
Time we recognize that housing is not an investment but a necessity.
Insurance is a joke. It doesn’t matter if you have an insurance if you need to wait for your money days, weeks, months, years.
I bought a house with a roof less than 5 years old and when it leaked, I called insurance as one does and they said sorry, not covering it, also because you have a leaking roof, we are dropping you from coverage. Good luck finding another insurer to cover you, good bye.
Finding out insurers have insurers makes me feel like Mark Baum when he discovered synthetic CDO's. It not a matter of if, but when this flimsy pyramid collapses.
Maybe, just maybe, if they stop paying out for minor hail dings that do not do any real harm our rates would be reasonable. It blows my mind how we re roof using insurance having 90% plus roofs replaced using insurance money.
At 7:33 he talks about forgoing home insurance while failing to state that the only people that can forgoe insurance are those that own their own homes. These are most often wealthy people that can afford the risk. Its no surprise that as home owners insurance gets more expensive some people will choose not to buy it. The video appears to be poorly researched or even intentionally misleading.
I agree. He should have pointed out that if people are unable to cover their homes losses without insurance and cannot afford the insurance for the home that they are living beyond their means and need to downsize to a home they are able to afford. Consumers need to stop over extending themselves and live within their means.
Insurance companies are FOR PROFIT
NOT 4 U.
Ya know, I have been thinking lately that we have been having some WILD storms every summer now in Michigan. 😭
So in a free market contest, people will move into regions that have lower environmental risks due to climate change. Which is the right thing to do I guess.
Did we watch the same video? That's literally the opposite of what people are doing.
Free market cares most about what is happening next quarter, not what is good long-term.
whose going to buy the homes in higher risk environment? Aquaman?
@@razgriz2007 It's because of public insurance that people stay in the region under threat. And I am not saying that the free market is good. I am just saying that without State intervention people will migrate to less risky regions, which is a desired effect.
@@danielburke6479 People can just not repair their house after a climate disaster, accept the loss and move. Climate-induced migration is a real thing and explains in part why humanity did not stay in Africa.
@@razgriz2007 thats not a real free market america isnt real capitalism /s
Can we talk about how insane it is that people are still ignoring climate risks just to live in popular areas? Some things are clearly not built to last!
Sounds like a good time to be a general contractor or run a restoration company
This may be a dumb question, but if home prices were lower, wouldn't that also help since payouts from insurers would be lower?
There are no dumb questions. Yes, if home prices do not rise then it would help from insurers perspective since it would be limiting the loss claims in volumes in total even if risk frequency continues to grow.
On the other hand if the established trend from the last decades of home prices going upwards was financially assumed to continue in the mortgages, then this might lead to banks re-evaluating the provided guarantees (which is normally the purchased home) and start asking the owners to provide some other assets as guarantee to secure themselves.
Sure, but there is already a shortage of 4 million housing units so significant price declines aren’t going to happen
i think we have to tax GHG emissions across the board to mitigate the future damage from anthropogenic climate change, change our local zoning to permit building with stone and masonry materials, and change our tax system from property taxes to land taxes so that we density our cities and further reduce climate change.
My mom canceled her home ins policy after they almost 10x her premium per year, can't blame her. If I owned here in CO I'd at least have a roof exclusion on the policy the re-roofing every single hail storm has gotten ridiculous
Can't do that if you have a mortgage. I'd love to do that too, but at 2.25% mortgage, why would pay off my house to save on the premium? Location matters here. Are we talking about 2K a year or 12K a year? For the latter, yeah I'd have the balance of my mortgage paid TWICE, which obviously warrants getting rid of insurance. I'd pay off my mortgage at that point.
Another reason people are moving towards higher risk places is because those are the places that are actually allowing housing to be built, so the cost of homeownership there is less.
He mentions this problem. It is encouraged by the government because they allow houses being built even though they cannot be insured. And builders will look the other way because they are just in it to get money.
Goodbye to single family dwellings in american suburbia. A a lot of the new ones are made out of cardboard anyway. Time for smarter housing decisions. More affordable housing made with better materials and planned based on local topography instead of cookie cutter idiocy, with higher density too
Everyone will live in cities
I live in a high fire risk area. No insurance company will even sell me insurance. I could go through a State program, but that's way too expensive, and it's just basic fire... no homeowner's insurance option. I've had to live this way for 15 years, and came pretty close to having my house catch fire three years ago when a neighbor's home literally exploded while he was trying to start his generator during a power outage. I'm way too old to start over, but that's life...
amazing video! great rundown on the current housing market and the rippling effects that insurance has on new and current homes cost. Thank you for the good work!
This guy is super cool. Well spoken. Really creative.
If your home values double in 5 years you should expect your premiums to track.
Not precisely. Home values increasing drastically usually mean the ground underneath the structure has appreciated. Structures depreciate over time. Home insurance is based more on improvement value. If your property value doubles in 5 years, but you haven't increased the value of property improvements, your insurance shouldn't go up very much unless the cost of labor and materials has drastically increased.
@@randxalthorno because the if the home values doubles then the land value would go up by 5 times assuming the property part did appreciate but that’s not the case besides that would encourage tons of people to build homes
Home value and the cost of rebuilding aren't necessarily the same. Sometimes you need to have insurance for hundreds of thousands of dollars more than what the home is worth.
@@randxalthor home value not home and property value
This is one thing that trickle down actually shows up,. It also affects utilities and all small businesses that have little choice but to raise prices to cover insurance hikes. On and on.🤔
For those that don’t understand why health insurance costs so much, same reason but replace bad weather, with smoking, alcohol, sugar, ultra-high processed foods, and sedentary lifestyles mixed with not enough people paying in…
These stats come from the insurance companies. How are they still in business? They still have a payroll to meet. CEO’s and board members have to be compensated to the tune of millions.
They are for-profit companies that are publicly traded. Pretty sure they will abandon a market if they know the risk is too high for year over year losses.
So glad to see someone talking about home insurance. We lost ours about a year ago and the company made very little attempts to reach us. Basically a call and a letter, we didn't get either and the call we probably thought was about car insurance as our daughter had just got her license and Nationwide was having trouble adding her. So come February we didn't know we lost our insurance which we need cause our mortgage requires it. Our cost went up we're with a more unknown company etc etc we got a broker and she said she's never seen it this bad. Large insurance companies are actively looking for reasons to remove people.
Moved from Maryland to upstate new York at the start of the year, and experienced what everyone described as the most mild winter they have ever seen, followed by the biggest summer storms they have ever seen. The winter being mild? OK i'm used to mild winters, so that didn't hit me as hard. But the summers? TORNADOS in upstate a few cities over actually knocking down buildings? Me driving home and seeing an actual small tornado forming over lake Ontario? Now THAT was scary. Maryland has strong August storms, but they never really scared me like the storms of this summer up here with actual damage, not to mention there was also damage back in Maryland from similar sized storms. With my dad trying to spend more time in Florida but his trips being delayed cause of storms, and my vacation spot in Western North Carolina almost getting destroyed by Hurricane Helene, and the cost of housing... I'm not sure what to do as a 23 year old looking to buy a house in the next few years. I'm already not having kids cause of all the risks involved, can I at least have a place to live? Hopefully insurance profit incentives will decrease. If a.. recent event involving a healthcare CEO is anything to show how done people are with it.
Yep, we’re all standing by on the west coast to buy up all the already cheap houses in middle America when they’re discounted by another 50-70% with the loss of insurance. There’s just tons of cash ready to pounce on self-insured rentals. Going to be an interesting decade or two ahead.
I had to leave a fairly high paying job recently in the insurance industry. I only ever handled catastrophe claims and saw the writing on the wall a few years ago. Everyone I worked with could feel the change in workload from just a few years ago. I’ve honestly never had a more stressful job.
Interesting. As someone in Michigan, we tend to be viewing our weather and climate as, in fact, getting more mild. A state that once received many many feet of snow in winter now doesn’t get snow days and rarely has snow on Christmas.
Our insurance rates have been noticeably higher, but that seems to be from lobbying and legislation. There’s a law firm I know that’s been working to collect testimony from citizens who were impacted by a million$+ private payout to Whitmer by insurance companies, which increased rates and decreased coverage. We also suffer from our tax and toll structure which doesn’t collect from freight which means freight goes on any road with as much weight as they want, ruining roads and making neighborhoods less safe to walk.
The sentiment from citizens tends to be that the faults of Michigan are entirely from terrible leadership for a long time. Lack of sustainable industry. Lack of infrastructure. Lack of education investment. Lack of city planning - were completely starved of any walkable cities. Our climate and our rural life is the one thing we cling to.
Fantastic. Can’t imagine anything better than insurance companies losing money. It’s already hard enough getting them to pay out when people literally PAY THEM TO GIVE THEM COVERAGE WHEN THEY NEED ACTUALLY NEED IT
Home prices are up 50% since 2020. Since insurance has to replace the value of the home, and insurance premiums are up *only* 35% that is a 15% gap between the increase in home prices and insurance premiums. The weather doesn't need to be more extreme for that to be causing a problem. Many of the states seeing insurers leave have laws that limit the maximum rate at which insurance premiums can rise.
The problem isn't just the weather... House price inflation is actually the biggest culprit
Back in the day, we had a thing called fire insurance in America. There would be competing fire stations in each town and would only put out fires on houses insured by the fire station. No insurance? No one would try to put out the fire. Rich people would buy insurance with all stations to get priority in the fire being put out on their homes. A couple decades later, we have socialized fire stations. We pay taxes and collectively pay them for protection via taxes. Collectively paying for fire insurance via taxes is cheaper than us individually paying for fire insurance.
Collectively paying taxes for health insurance and for home insurance would be dramatically cheaper than individually paying for these services.
While you're right, it would also incentivise to keep building in more risk people locations that perhaps shouldn't be built in. Though that's very case to case.
Except you are completely wrong... Health insurance is socialized and its costs are still through the roof. Whats worse? Is that the 'free' coverage has a hard upper limit. Which means that if you make a dollar more than the cap (say 25,000), you will now have to pay for health insurance on your own. And the exhorbinate fees actually bring you LOWER than when you didn't qualify for free insurance.
The problem with socialized healthcare is that
1. People dont feel responsible for their health cause they get free healthcare.
2. Insurance companies collect bank cause they basically have a GAURUNTEED customer base.
3. If the gov does not pay enough, the insurance can just put the costs onto the PREMUIM payers. Which is why my dad is paying 7,500 a year on just the payments and then still has to pay out of pocket for whatever he gets.
@@Xenozillexyou sound like ChatGPT. Just because you have access to medical care doesn't mean you won't take care of your own health. That simply doesn't follow.
The main issue in the US is that hospitals overcharge. It's as simple as that. They have the charge master with sky high prices(that's how you get $50 bandaids, no exaggeration) , then they have insurance negotiated prices, and then there's the price for everyone else - that can get negotiated down massively if you don't accept the first bill.
Actually socialized health care brings price down. And I'm not just talking insurance, I'm talking about public hospitals, either at the state or federal level. Indeed, if you just pay whatever private hospitals want, single payer doesn't fix the issue. But if you have government run, even if only for serious cases, you place a cap on how much the rest of the system can try to charge you.
You just have to look into how health care is run in other countries. And I mean really look, not just take some sentences that corroborate your own viewpoint.
@@Outworlder chatgpt isn't anti-gov as I am.
First, has the cost of healthcare lowered or risen since Obamacare? You know what Obamacare is, right? America's attempt at (expanding) socialized healthcare.
Second, have you considered, just for a second, that 'other' countries already have a higher tax rate than us? Do you seriously look at your paycheck and go 'I think the gov needs to take even more.'
Or, maybe you don't work. Which would be consistent with your pro-gov expansion beliefs.
2:03 stop it bro. They are putting houses where they don’t belong.
All over the country?
This is because insurance isn't supposed to be a "payment plan." I have a high cost of hail damage in my area, so instead of a "rare event" it's really just something you need to plan for. I take the insurance for hail off my house and I plan accordingly.
Also in florida and now other states, insurance fraud adds additional costs to the system.
People need to call their insurance companies too. Insurance companies love selling you more coverage than you need. I hade a $675,000 replacement plan. I just changed it to $500,000. If my house burns down I will just sell the land and buy a different one with money from the land and insurance pay out. Removing that $175k extra kept my insurance rates the same.
Most people have mortgages. You CANNOT opt for partial replacement cost with the insurer when you have a mortgage, you have to bind coverage for the full replacement cost as their appraisers deem the full cost to be. Sure, if you don't have a mortgage you don't even have to carry insurance (it'd be pretty dumb to not at least carry liability only, given it's pretty cheap).
@@GonzoT38 I guess that is true, I don't have a mortgage, but you should be able to only have to insure for the amount of the mortgage.
Personal opinion.. Laws should be made that require "insurance companies" to meet at least 75% pay out claims. They can increase rates as much as needed as long as they are at least paying out 75% to claims. 15% should be allowed to cover operating costs and max of 10% for profit margin. Excess unpaid insurance should be returned to policy holders every year. This should cover all insurance.. medical, vehicle, home, etc..
Thanks for bringing this aspect in comprehensive video. I haven’t considered this part of home ownership.
Housing prices are unlikely to significantly decrease until there's a substantial increase in housing supply. In the USA , there's a shortage of millions of housing units, and construction isn't keeping pace. The constant demand for housing, coupled with population growth, means that even a slight price drop attracts numerous buyers who quickly absorb the available supply. I'm considering purchasing affordable houses in 2025 and possibly venturing into stock investments. When is the best time to enter the stock market? Some people say it is profitable , but others say it's risky. Any advice?
Consider investing in stocks especially during a recession . While recessions can be tough, they can also offer good chances to buy low and sell high in the markets if you're cautious. Just remember, this is not financial advice, but it's a good time to think about buying stocks since having cash on hand isn't always the best option.
Mind if I ask you to recommend this particular coach you using their service?
Credits goes to " Annette Christine Conte" one of the finest portfolio managers in the field. She's widely recognized; you should take a look at her work.
Insightful... I was curious after reading what you shared, so I Googled her name. I came across her webpage.
Option 5: Deny ever covering anything
Downsizing is the correct solution. It doesn't have to involve finding a buyer. Renting out some rooms is a form of downsizing.
One of the things you didn’t mention is the soaring cost of reinsurance costs burdening down primary insurance. In Florida rates for reinsurance went up like 50% and in Louisiana many RI won’t even take you
My insurance went up 300% under farmers ins.
Thanks. This made understanding why my home insurance rate went up a lot this year.
How are these issues being handled in other countries?
The housing crisis will self correct. The reality is our population is decreasing at an alarming rate. This will lead to more homes than people. Yet, this is likely a problem for our kids or more likely whatever grandchildren are around.
Isn't the solution to also build smaller homes? Less chance of being hit and less cost.
Yes, but builders make less money on smaller homes so that’s what they build.
Hmm, how can this be solved???? I got it! DROP THE FRIGGIN PRICES OF THESE HOMES!!!!!!!!!
I'm a tabletop Wargamer, and risk is kinda the light weight version of my type of strategy game.
I play often, haven't lost in years.
Always go for south America first, while attempting the block of your opponent getting the other one.
Depending on where they went, either go for north America or Africa second, then push in for all of Asia. Once taking that, you can easily take the rest of the nap.
Why are the rates going up in northern Illinois where we have no hurricanes, sea rise earthquakes or forest fires? GREAD simple.
Easy solution: Insurance companies need to put a premium policy cap on the damages assessed based on the networth of the individual & the cost of the house. Removing "expensive" real-estate from the equation would effectively change "how much" they would need to spend within the policy, and in particular, stop covering costs in places like Florida, where it's becoming a "choice" to live there, despite the constant weather problems. Only raising their premiums, not everywhere else, would fix that problem. Lower premium costs in areas where "natural disasters" aren't ripping your house in half, and increase premiums in areas you're more likely to experience your roof being ripped off from a hurricane that's about to flood your street so bad that every car now has flood damage.
Um, he left out a critical piece of information at 0:23 He incorrectly stated insurers are paying out more in claims than premiums but his slide shows that its actually claims + expenses divided by premiums. Like a nonprofit an insurance company can do nearly anything it wants with its revenue. If they wany to show a cost ratio over 100 they could just pay the employees more (an expense). How could he ignore this? Macy would never miss this.
The housing market in the US is so Fd up.
30y mortgages are also Fd up, property values adjusted to those mortgages and now a 5y mortgage is out of the question. If you finance you’re forced to have insurance and the only way to safely forgo insurance is building sturdier homes but that also inflates the price of construction increasing the price of the property. And if you want to build your own home to forgo insurance and financing altogether, there’s a ridiculous amount of red tape.
Good luck america 😂😂😂
Build smaller footprint, cheaper more affordable housing! Housing is already a racket...its no surprise insuring one is also a nightmare.
Smaller footprint yes, but choose better quality, better location, so fewer risks.
@icls9129 much can be learned from the 3 little pigs lol
Home insurance market is broken. The problem started in Florida but it has since spread to California, the Carolinas, and many other states. We need a national insurance program that covers damage caused by weather, with the US Treasury as the reinsurer.
This is my area of work and this was a well done video.
Scientists have been screaming about the effects of climate change for decades. Frankly, this is in large part the result of willful ignorance. I only feel empathy for those too poor to move.
Higher prices are not just due to "more bad weather." Inflation is the biggest culprit. If the rate of property damage remains the same, the cost of repair (materials and labor) still rises due to inflation. Also, housing inflation hits property taxes exactly the same way for exactly the same reason. Property tax rates are stable, but people are paying more for taxes.
No insurance, no mortgage.
Wow didn't think about caulking. This would totally help during a tonando, hurricane, or a house fire.
States could put more into emergency management to help this problem, it's just the issue of instant gratification.
insurance companies make most of their money from investing the premiums. they still make plenty or money if they pay out more than they take in premiums