Climate Change and Real Estate: How Insurance Costs Are Triggering a Financial Crisis
Transcript:
Doug McIntyre: I mean, I have a friend in South Carolina.
This is just a little story.
But in one year, home insurance close to the water in South Carolina went from $30,000 to $59,000.
That was like it got the new bill.
And now let’s look at the cascading effect of this.
There’s a person who can’t afford the increase, OK, from 30 to 59.
That person’s only choice is to go uninsured or to sell a house.
So it seems to me that another effect of this is going to be that real estate markets in some of these areas, which may have been very, very hot.
Things were growing great.
You’re going to start to see a reversal of that as people either can’t get homes insured or a buyer says, I’m not going to pay that kind of insurance.
Dave Callaway: Right. That’s the next step of the financial crisis.
If you don’t have insurance on your home, in many cases you violated the terms of your mortgage.
And so the bank could theoretically call in your mortgage.
Not that it wants to, but it would have the ability to.
And so suddenly the banks are becoming involved and are becoming worried.
This is why you’re seeing the state step in and kind of put a Band-Aid on the process by saying, don’t worry, we’ll insure it so you can keep your home and satisfy your mortgage obligations.
But that is not a long-term answer.
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