Trust This. Triple Threat Risks

Trust This.

By Joseph E. Seagle, Esq. ● Jan 24, 2025

Smart Brevity^® count: 4 mins…1122 words

👋 Happy Friday! Today is National Compliment Day, and you’re looking fabulous 💅 !

Situation Awareness: I’ll be presenting a webinar about checkbook-control IRA LLCs on Tuesday evening for the CFRI Seminole County chapter. Register here to attend virtually.

1 big thing: Triple threats and insurance gaps

A recent CoreLogic report highlights a critical issue for homeowners and real estate professionals: the convergence of multiple natural hazards and significant insurance gaps leave properties increasingly vulnerable to catastrophic losses.

Key Findings:

1. Triple Threat Exposure: Cities like Miami have many homes facing extreme risk from three distinct perils—hurricanes, wildfires, and floods. This convergence amplifies potential damage and complicates mitigation efforts.

2. Insurance Shortfalls: Standard homeowners’ insurance policies typically exclude flood damage, necessitating separate flood insurance. Despite escalating flood risks, adoption rates for flood insurance remain alarmingly low, leaving many homeowners unprotected.

3. Insurer Withdrawals: In response to increasing natural hazard risks, some insurers have ceased issuing new policies in high-risk areas, notably in California. This trend reduces homeowners’ coverage options and can impact property values.

Implications for Real Estate Professionals:

• Property Valuation Challenges: Properties in high-risk areas may experience depreciation due to potential buyers’ concerns over insurability and safety. Real estate professionals must stay informed about these risks to provide accurate valuations and advice.

• Client Advisory Responsibilities: It is essential to advise clients on the importance of comprehensive insurance coverage, including flood insurance. Understanding the limitations of standard policies can help clients make informed decisions and protect their investments.

• Market Dynamics Awareness: The withdrawal of insurers from high-risk markets can lead to increased insurance costs and decreased availability, affecting property affordability and marketability. Staying abreast of these trends enables professionals to navigate the evolving landscape effectively.

The increasing frequency and severity of natural disasters and significant insurance gaps pose substantial risks to property owners and the real estate market. Real estate professionals are pivotal in guiding clients through these complexities, ensuring they know potential risks and the importance of adequate insurance coverage.

The bottom line: By proactively addressing these challenges, the real estate industry can build long-term resilience in communities nationwide.

Go deeper: Financial Times; Vox; Wall Street Journal

2. One-third of homeowners say they’ll never sell their home

A recent Redfin survey reveals that 34% of U.S. homeowners intend to remain in their current homes indefinitely, with an additional 27% not considering selling for at least a decade.

Key Factors Influencing Homeowner Decisions:

1. Mortgage Rate Lock-In: Elevated mortgage rates, hovering around 7%, deter homeowners from selling, as many hold mortgages with significantly lower rates.

2. High Housing Costs: The substantial financial burden of purchasing a new home in the current market further discourages potential sellers.

3. Contentment with Current Residence: Many homeowners express satisfaction with their existing homes and locations, reducing their motivation to move.

Implications for Florida’s Housing Market:

• Florida’s real estate market, characterized by its popularity among retirees and a significant baby boomer population, is particularly susceptible to these national trends.

• Inventory Constraints: Homeowners’ reluctance to sell contributes to a limited supply of available homes, intensifying buyer competition and sustaining upward pressure on property prices.

• Market Dynamics: High demand and constrained inventory may increase home prices, potentially impacting affordability for new Florida buyers.

• Opportunities for Real Estate Professionals: Understanding these homeowner sentiments is crucial for real estate agents and developers. Strategies focusing on new construction or catering to the specific needs of long-term homeowners looking to downsize or relocate could effectively address the inventory shortage.

The bottom line: The prevailing homeowner inclination to stay put, driven by financial considerations and personal contentment, is a significant factor influencing Florida’s housing market. Real estate professionals should adapt to these trends by exploring alternative solutions to meet buyer demand and mitigate the challenges of limited housing inventory.

The latest edition of Land Trusts in Florida: 11th Edition is still on sale on Amazon for a limited time. Order your copy in paperback or Kindle.

Listen in or watch the Trust This podcast on your favorite streaming platform.

3. Catch up fast

1. A rundown of Trump’s executive orders. Bloomberg

2. What Trump’s first week means for private real estate investors. PERE News

3. Trump signs executive order to reduce housing costs. What exactly does it do? Scotsman Guide

4. Trump’s EO on housing costs must navigate local regulations. HousingWire

5. Fannie Mae forecasts a tough year ahead for homebuyers. MPA Mag

6. Average interest rates drop below 7% for the first time since mid-December. Bloomberg

7. Foreclosure filings down 10% in 2024. The Title Report

4. Closing Thought: Killing the sacred cow of accumulation

In Killing Sacred Cows, Garrett Gunderson exposes myths that undermine financial success.

The third sacred cow he slays? The belief in “the accumulation theory” — the idea that wealth is built solely by saving, deferring, and accumulating over time.

Why it matters: Gunderson argues this outdated notion leads to scarcity thinking and delays the ability to enjoy financial freedom.

The big picture: The accumulation theory encourages people to work tirelessly, save aggressively, and sacrifice present-day enjoyment for a future payoff. Gunderson counters that this approach often results in missed opportunities and financial strategies that fail to adapt to life’s unpredictability.

What he says:

• Saving and hoarding money isn’t a wealth strategy; it’s a scarcity mindset.

• Money is a tool, not a goal. Its value lies in how effectively it can create freedom and abundance.

• Focusing solely on accumulation overlooks opportunities for growth, innovation, and financial independence in the present.

Zoom in: Gunderson champions the concept of cash flow over accumulation.

• He encourages individuals to invest in assets, businesses, and opportunities that produce ongoing returns today—not decades down the road. By leveraging financial strategies that emphasize value creation, individuals can achieve a life of prosperity without waiting until retirement.

The bottom line: Killing the sacred cow of accumulation frees investors from the cycle of sacrifice and waiting. Gunderson’s message: Wealth isn’t about what you store away for tomorrow—it’s about what you create and enjoy today.

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