When Hurricane Ian tore through Florida, the damage was immediate and visible—flooded homes, devastated communities, billions in losses. What’s less visible, at least for now, is the second wave of impact: what happens when the real costs of living in high-risk areas finally hit the housing market.

As someone who has spent decades developing and investing in real estate across the country, I can tell you this: Florida’s housing market has not yet priced in the true costs of flood risk. Homeowners are paying artificially low premiums for flood insurance, while insurers face rising claims and an unsustainable mismatch between risk and revenue. That disconnect won’t last forever.

And when it breaks, property values in the hardest-hit areas could fall by as much as 50%.

The Insurance Time Bomb

I’ve seen how insurance costs can change the economics of entire neighborhoods. In Florida, the problem is magnified by FEMA’s new Risk Rating 2.0, which recalibrates flood-insurance premiums based on actual risk instead of outdated flood maps.

Here’s the reality: some policies that used to cost $300 or $400 a year could soon cost $10,000 or more. That’s not a rounding error—it’s a tidal shift in affordability. Layer that on top of already sky-high home insurance premiums in Florida, and the math gets ugly fast.

Buyers aren’t going to ignore those costs. When they see five-figure annual insurance bills stacked on top of mortgage payments and maintenance, demand will dry up. And without demand, values will fall—potentially by half in places like Fort Myers and Cape Coral, where Ian hit the hardest.

Why This Time Is Different

In past disasters, markets bounced back quickly. Buyers shrugged off risks, convinced rising home prices would insulate them from losses. That playbook is breaking down.

Interest rates are already cooling buyer demand, insurance premiums are climbing, and the cost of capital is rising across the board. This is a perfect storm—literally and figuratively. The days of relying on perpetual appreciation to mask risk are over.

As I look at Florida, I see a clear warning for other markets. Flood, fire, seismic risk—all of these will be repriced. Once homeowners experience real financial harm that isn’t erased by fast appreciation, they will start reacting differently. Buyers will hesitate. Lenders will scrutinize deals more closely. Insurers will demand more.

What Investors and Developers Should Watch

This isn’t just about Florida—it’s about the way climate and insurance dynamics are going to reshape U.S. housing markets. The lesson here is one I build into every deal: you cannot ignore risk pricing. Eventually, the market catches up.

For developers, that means underwriting more conservatively, anticipating insurance escalations, and looking at alternative structures (like resilience-focused building methods) that can soften the blow. For investors, it means knowing which metros are over-exposed and which markets are positioned to benefit as capital flees high-risk zones.

The repricing is coming. The only question is how fast.

Daniel Kaufman

President, Kaufman Development

Kaufman Family Office | Oldivai