High Prices Meet High Demand In Houston, ‘The Most Interesting Condo Market...

[lio45]

Originally Posted by Altoic

You don't need a direct hit in the NE for heavy impacts to be felt. Hurricane Ida at its weakest point wrecked significant damage across many NE states. Any other coastal region wouldn't suffer the same impacts but because cities like NY or Philadelphia have old infrastructure not adapted to weather, old buildings (with basements), and a different soil composition/vegetation, flooding was much more prevalent.

Ida's Path:



Ida hit New Orleans as a category 3/4 and caused 18 billion dollars in damage. When Ida reached the NE, it wasn't even a tropical storm and caused 16 billion to 24 billion dollars in damage, making Ida the 6th costliest hurricane on record.

This Hurricane season is projected to be extremely active with low wind shear, higher than average sea surface temperature, and the La Nina pattern arriving early. Sandy was a once in a 500 year event at its impact, but I'd say it's more like a once a decade or twice a decade event. If you are a coastal state. YOU. ARE. NOT. IMMUNE. TO. STORMS.

But on a side note im glad cities like NYC are weather proofing to minimize damages. Houston should take notes lol

I recall (from reading about it; I wasn’t born yet) that Hurricane Camille (1969) also caused lots of damage to WV and Western VA, which is pretty damn far inland.

(Path somewhat similar to your image of Ida.)

[lio45]

And on a related note, we just had a tornado destroy a couple homes here in Quebec. Not sure if these people had the “correct” insurance for that (insurance companies love it when they can get away with not paying…) as it’s extremely rare here.

[Nouvellecosse]

It's interesting to consider how rising costs due to increased risk should be handled. On one hand it isn't necessarily any individual person's fault that they happen to live in a high risk area since that may be where they were born and raised or where the best or only job was available in their field. So it doesn't exactly seem fair that they should be burdened for something outside of their control. But on the other hand, there needs to be some way to justify people who don't live there sharing some of the risk if we're not disincentivizing people living in high risk areas.

From a more libertarian standpoint you could say that people are free to choose where to live based on a combination of their preference and their means, and no one is entitled to live someplace they can't afford. High prices already prevent many people from living in many places they want to live so that is nothing new and no one is guaranteed the ability to live if it's too expensive. For instance, we often see people priced out of places through gentrification or simply because it's a very high demand and expensive area. Obviously we complain about that because it does limit freedom and since that is a human controlled process whereas natural disasters are not. Climate change increases the rate of some natural disasters but humans have no control over what areas are affected by climate change and to what degree while solving climate change is outside the scope of any individual government. So there's really not much we can do about the fact that certain areas are riskier than others.

For me it comes down to what the country is getting out of supporting habitation in those high risk areas. Is it contributing more to the economy and more to the nation's success compared to if those people lived in lower risk areas? And is it contributing enough to outweigh the extra cost imposed by natural disasters? If so then I think we could justify spreading the risk across the entire country. But if that can't be clearly demonstrated then no. Certainly people should still get assistance for things like disaster relief or relocation if they need it, but to make it so that there's no financial incentive for people to choose lower risk areas over higher risk areas is different because once a disaster already happens people have no recourse. No one can go back in time and decide not to live there. But high insurance rates is a sort of slow burn. It's not an instant calamity that completely upends a person's life the way a natural disaster can be so it can nudge people into choosing differently.

[iheartthed]

Originally Posted by Altoic

You don't need a direct hit in the NE for heavy impacts to be felt. Hurricane Ida at its weakest point wrecked significant damage across many NE states. Any other coastal region wouldn't suffer the same impacts but because cities like NY or Philadelphia have old infrastructure not adapted to weather, old buildings (with basements), and a different soil composition/vegetation, flooding was much more prevalent.

...

Ida hit New Orleans as a category 3/4 and caused 18 billion dollars in damage. When Ida reached the NE, it wasn't even a tropical storm and caused 16 billion to 24 billion dollars in damage, making Ida the 6th costliest hurricane on record.

This Hurricane season is projected to be extremely active with low wind shear, higher than average sea surface temperature, and the La Nina pattern arriving early. Sandy was a once in a 500 year event at its impact, but I'd say it's more like a once a decade or twice a decade event. If you are a coastal state. YOU. ARE. NOT. IMMUNE. TO. STORMS.

But on a side note im glad cities like NYC are weather proofing to minimize damages. Houston should take notes lol

Because Ida wasn't a tropical system when it reached NYC, the damage was different from what occurred during Sandy. Ida caused interior flooding (as opposed to coastal flooding from Sandy) because the ground was saturated by an unusually rainy summer. By the end of that summer the streets all over the region would flood almost any time there was a moderate rainfall. I live in a higher elevation area of Brooklyn that isn't susceptible to coastal flooding, but the streets in my area were regularly flooding that summer because of ground saturation. I had never seen the area where I live flood at all until about four years ago, and now it happens on a fairly regular basis. And this area didn't flood at all during Sandy.

[3rd&Brown]

Originally Posted by lio45

I recall (from reading about it; I wasn’t born yet) that Hurricane Camille (1969) also caused lots of damage to WV and Western VA, which is pretty damn far inland.

(Path somewhat similar to your image of Ida.)

My father's childhood home was actually destroyed in Camille in a suburb of Philadelphia. But do you know what happened? The entire neighborhood was destroyed (Eyre Park in Chester, PA) and was never rebuilt.

That was also almost 6 decades ago. So no, pulling out the random few examples that hit a region with localized effects every decade is not the same as underwriting insurance in an area that will require total replacement of entire structures every couple of years in massive swaths of a region.

Replacing homes in a subdivision due to localized flooding of a hurricane in a major metro is not the same as rebuilding or repairing nearly every structure in Fort Meyers due to a direct hit from a hurricane.

[lio45]

A good idea IMO would be that “socialized risk” bailouts are only available on a “maximum x times per y years” basis, regardless of location.

Your Appalachian home gets destroyed by Hurricane Camille, once per century? You’re covered. Your home gets destroyed every second year? Well, you’ll use your socialized risk coverage and when you’re through, you’ll be paying yourself for a while, until your allocation of socialized risk gets refreshed.

[JManc]

Originally Posted by lio45

A good idea IMO would be that “socialized risk” bailouts are only available on a “maximum x times per y years” basis, regardless of location.

Your Appalachian home gets destroyed by Hurricane Camille, once per century? You’re covered. Your home gets destroyed every second year? Well, you’ll use your socialized risk coverage and when you’re through, you’ll be paying yourself for a while, until your allocation of socialized risk gets refreshed.

I think that is fair but insurance companies are 'writing' off entire cities because there are certain areas within them that are very high risk. My house is 42 years old and to my knowledge, never flooded or sustained wind damage but the entire region is being blacklisted by insurance companies because the amount of claims...which there are a lot in SE Texas. There was a neighborhood fairly close by that flooded 2x and again during Harvey (2017) and the county ultimately condemned and tore down. That needs to happen more often.

In Houston, we're more susceptible to flooding than wind damage and anyone living near bayous, lakes or rivers should assume the high risk. The vast majority who flooded during Harvey and didn't live near water was caught in a once in a century event that was largely man-made. Reservoirs were emptied to prevent overflow.

[iheartthed]

Originally Posted by JManc

I think that is fair but insurance companies are 'writing' off entire cities because there are certain areas within them that are very high risk.

I think this is because some states mandate that insurance companies offer insurance to anyone in a state in order to do business. Some (most?) states also have laws that fix how much the most and least insurance policies can vary. I think that was a practice to combat redlining, but is being exploited to subsidize houses built in risky areas.

[VivaLFuego]

Originally Posted by JManc

My brothers pay between $600-700 a year for their houses in New York but the worst they get is a blizzard every so often. I never paid anything less than $2,500...which is fine because I am in a higher risk area due to hurricanes (flood insurance is seperate) and but when you start cranking it up to almost $7,000, that's a problem and we never even had a claim. I can understand the pushback if homeowners were expecting coverage after near or total losses once or twice already but most people around here have not. The county condemned properties that were flooded during Harvey and flooded out at least twice before...as they should.

As for Ron DeSantis and Greg Abbott, are you going to lay down collective judgement on FL and TX, respectively, because of their views on climate change? Is California off the hook even when much of that state is even higher risk because Newsom believes in climate change?



Your lender will automatically enroll you in their own policy (often much higher) if there is a lapse and you don't have an option to opt out. If you refuse, the bank would foreclose.

Have you looked at Expected Annual Loss ratings for different areas?
https://hazards.fema.gov/nri/map

To take a quick example, the expect annual loss due to natural hazards in Albany Co, NY is $1 per $7,200 of building value.
In Harris Co, TX the expected annual loss is $1 per $421.55 of building value.

If your insurance is 10 times more than your brothers' in upstate NY, you might still be getting a decent deal, and you're disappointed that you're no longer getting a great deal.

Alternatively, if the risk models aren't sufficiently taking into account highly local factors around the drainage sheds, it sounds like a business opportunity for insurers to target the allegedly low-risk Houston properties with competitive rates to the extent permitted by law. Of course, this will result in adverse selection of any remaining risk pools, making the other properties even less insurable.

[3rd&Brown]

Originally Posted by VivaLFuego

Have you looked at Expected Annual Loss ratings for different areas?
https://hazards.fema.gov/nri/map

To take a quick example, the expect annual loss due to natural hazards in Albany Co, NY is $1 per $7,200 of building value.
In Harris Co, TX the expected annual loss is $1 per $421.55 of building value.

If your insurance is 10 times more than your brothers' in upstate NY, you might still be getting a decent deal, and you're disappointed that you're no longer getting a great deal.

Alternatively, if the risk models aren't sufficiently taking into account highly local factors around the drainage sheds, it sounds like a business opportunity for insurers to target the allegedly low-risk Houston properties with competitive rates to the extent permitted by law. Of course, this will result in adverse selection of any remaining risk pools, making the other properties even less insurable.

This. Thank you for posting.

It's not even logical that someone who lives in a subtropical hurricane zone in an era of intense global warming would expect to pay only 2-3 times what those of us who live in low risk areas pay.

This country has been subsidizing poor development decisions for years. And those decisions have also contributed to narratives about "healthy" regional economies versus static regional economies etc. The marketing power around "best places to do business", "best places to live", has always been mumbo jumbo bs but people make very real decisions based on these narratives.

It turns out we've been subsidizing it all along.

It happens with federal allocation of tax dollars as well. Generally, Southern states (I know there are a few exceptions) get more money from the federal government then they send to the federal government. Generally, blue states send more then they received. It's just another massive subsidy system.

Personally, I'm happy to see rationalization in the marketplace. If that means 100,000 people per year can't move to Harris County or whatever it is, so be it.

[bilbao58]

Originally Posted by 3rd&Brown

It happens with federal allocation of tax dollars as well. Generally, Southern states (I know there are a few exceptions) get more money from the federal government then[sic] they send to the federal government.

Texas is not one of them.




Also from the link:

New Mexico is the only state paying less in taxes than it receives in support – paying only 85 cents in federal taxes for each dollar of support. This was the only state with[sic] that paid less in federal taxes than it received back. The next four most dependent states – West Virginia, Alaska, Mississippi and Montana – receive nearly as much in support as they send to the federal government each year. Hawaii, Vermont, Louisiana, Alabama and Wyoming also top the list of most dependent states.

https://smartasset.com/data-studies/...overnment-2023

[SIGSEGV]

Originally Posted by VivaLFuego

Have you looked at Expected Annual Loss ratings for different areas?
https://hazards.fema.gov/nri/map

To take a quick example, the expect annual loss due to natural hazards in Albany Co, NY is $1 per $7,200 of building value.
In Harris Co, TX the expected annual loss is $1 per $421.55 of building value.

If your insurance is 10 times more than your brothers' in upstate NY, you might still be getting a decent deal, and you're disappointed that you're no longer getting a great deal.

Alternatively, if the risk models aren't sufficiently taking into account highly local factors around the drainage sheds, it sounds like a business opportunity for insurers to target the allegedly low-risk Houston properties with competitive rates to the extent permitted by law. Of course, this will result in adverse selection of any remaining risk pools, making the other properties even less insurable.

This is great, I just mapped out the census block data for the 11 biggest CSA's in terms of expected annual building loss rate (I think... I'm plotting 1/ALR_VALB from the shapefiles). Not sure why there's such county variation (is there an assumption that e.g. DC is better protected by policy? Maybe something weird about how building value is computed in DC...).