After Hurricane Milton: Could Florida's Property Market Face a Crisis?
After Hurricane Milton: Could Florida's Property Market Face a Crisis?
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Hurricane Milton tore through Southwest Florida this week, just days after Hurricane Helene, leaving behind destruction that’s still being assessed. This Category 3 storm made landfall at Siesta Key on Wednesday night, claiming at least 10 lives and causing an estimated $75 billion in damages. Among the wreckage was the roof of Tropicana Field, home to the Tampa Bay Rays, which was destroyed. A construction crane in St. Petersburg also collapsed, scattering debris over a wide area. With over 18 inches of rain and widespread power outages affecting more than 3 million Floridians, the devastation is profound. However, President Biden credited lifesaving measures for mitigating some of the storm’s worst effects, and Governor Ron DeSantis noted that Hurricane Milton didn’t evolve into the worst-case scenario many had feared.
But the real storm might just be starting. The economic fallout, especially for homeowners, could be catastrophic. Many of the hardest-hit residents lack flood insurance, a critical safeguard that’s becoming increasingly unaffordable in Florida. With insurers already staggering from Hurricane Helene’s damage, these back-to-back disasters are pushing catastrophe budgets to their limits. Analysts are warning that 2024’s reserves for natural disasters could be wiped out completely.
Florida’s real estate market is now staring down a potential tipping point. The state’s home reinsurance program has a statutory cap of $17 billion—based on outdated assumptions that a home faces the risk of a natural disaster every 500 years. In reality, Floridians are facing risks closer to every 20 years, a gap that’s been magnified by the increasing intensity of hurricanes. Without significant federal subsidies, home insurance could become prohibitively expensive for many residents. And if mortgage lenders stop issuing loans on properties that aren’t insured, Florida could face a dramatic collapse in real estate prices. The combination of rising premiums, increased climate risks, and regulatory caps is creating a perfect storm for the state’s housing market.
The insurance industry, already on shaky ground, is now grappling with how to cover losses while bracing for what could be an even worse hurricane season next year. Some experts are warning that the state’s approach to risk management and climate preparedness is unsustainable. If Florida can’t adapt to the realities of more frequent, more intense storms, its property market may face a downward spiral. As it stands, homeowners are bearing the brunt of higher costs, and as prices rise, more may be priced out of coverage entirely.
If federal bailouts for insurers become the solution, which state will be next in line for a rescue? California, with its rampant wildfires and crumbling coastline? Or perhaps Texas, battling tornadoes and droughts? The list of potential candidates is long. The truth is, government spending is already at an all-time high, and the national debt is reaching unsustainable levels. If the federal government steps in to prop up entire real estate markets, how much more money will need to be printed? And what will that do to the value of the U.S. dollar? The ripple effects on inflation and economic stability could be severe.
The American economy is ticking along…
Zooming out to the broader economy, last week’s inflation data showed a mixed picture. Both the Consumer Price Index (CPI) and Producer Price Index (PPI) came in slightly above expectations, hinting at persistent inflationary pressures. Core CPI rose by 0.3% month-over-month, with a 3.3% annual increase—higher than expected—and core PPI followed a similar trend. While these metrics aren’t the Federal Reserve’s top inflation gauges, they do point to inflation remaining above the central bank’s 2% target. This leaves investors uncertain about future monetary policy, with interest rate adjustments likely on the horizon.
In another twist, unemployment claims unexpectedly surged, reaching 258,000 for the week ending October 5. This marks the highest number since early August and could indicate softening in the labor market, further complicating the Fed’s decision-making process. Despite these economic uncertainties, U.S. stock markets continued to climb, with the S&P 500 and Dow Jones closing at new highs, fueled by strong earnings reports from major banks like Wells Fargo and JPMorgan.
This Week By the Numbers 📈
📈 Market & Economy
China investors anticipate $283 billion in new stimulus this weekend
German economy projected to contract again in 2024, signaling recession risk
🚗 Tech & Innovation
Tesla shares fall 7% after underwhelming Cybercab robotaxi reveal
AI startups raise record $11.8B in Q3 2024, fueling rapid growth in sector
DOJ escalates efforts to break up Google’s monopoly in antitrust case
⚖️ Legal & Regulatory
FTX bankruptcy plan approved, customers to be repaid with cash and interest
Ripple files cross-appeal in ongoing SEC litigation, prolonging legal battle
TikTok faces lawsuits from 14 states for being addictive to children
Supreme Court clears sale of $4.4 billion in Silk Road Bitcoin
🪙 Crypto & Blockchain
🎖️ Achievements & Milestones
Pioneers in artificial intelligence awarded Nobel Prize in physics
Hyped HBO documentary does not reveal Satoshi’s identity (spoiler alert - it’s not Peter Todd)
Top Stories 🗞️
US believes Iran is extremely nervous as it awaits Israel’s response to missile attacks
Iran’s government is extremely nervous and has been engaging in urgent diplomatic efforts with countries in the Middle East to gauge whether they can reduce the scale of Israel’s response to its missile attack earlier this month and – if that fails – help protect Tehran, sources familiar with the matter told CNN. Iran’s anxiety stems from uncertainty about whether the US can convince Israel not to strike Iranian nuclear sites and oil facilities, and the fact that its most important proxy militia in the region, Hezbollah, has been significantly weakened by Israeli military operations in recent weeks, the sources said. The US has been consulting with Israel on how it plans to respond to Iran’s October 1 attack, and US officials have made clear they do not want Israel to target Iranian nuclear sites or oil fields. US President Joe Biden spoke to Israeli Prime Minister Benjamin Netanyahu on Wednesday, their first conversation in almost two months, telling him Israel’s retaliation should be “proportional.”
Boeing to cut 17,000 jobs as losses deepen during factory strike
Boeing will cut 10% of its workforce, or about 17,000 people, as the company’s losses mount and a machinist strike that has idled its aircraft factories enters its fifth week. Boeing expects to report a loss of an $9.97 a share in the third quarter, the company said in a surprise release on Friday. It took charges in both its commercial airplane unit and defense business..
FBI Made a Profit From Ethereum Token Created to Catch Fraudsters
The Department of Justice (DOJ) unveiled a sweeping criminal case against 14 individuals and four crypto firms Wednesday. Gotbit, ZM Quant, CLS Global, and MyTrade were all accused of misconduct related to market manipulation—inflating tokens’ prices and volumes on demand. Over the course of its investigation, the DOJ identified around 60 cryptocurrencies allegedly manipulated by defendants’ wash-trading bots. That included a “token created at the direction of law enforcement” for a fake crypto company dubbed NexFundAI, the DOJ said Wednesday. The token was used to identify, disrupt, and bring alleged fraudsters to justice, according to the special agent in charge of the FBI’s Boston division, Jodi Cohen, who called the FBI’s deception “unprecedented” in a press release.
SEC Charges Cumberland for acting as an unregistered dealer
The US Securities and Exchange Commission (SEC) filed a lawsuit against Cumberland DRW, accusing the company of operating as an unregistered dealer. The SEC claims that Cumberland sold over $2 billion in crypto assets since 2018 without complying with federal registration requirements. According to the SEC, five tokens traded by Cumberland—Polygon (MATIC), Solana (SOL), Cosmos (ATOM), Algorand (ALGO), and Filecoin (FIL)—are considered securities. The complaint states that Cumberland acted as a securities dealer without registering as required under Section 15(a) of the Securities Exchange Act of 1934. Cumberland is not alone in its resistance against the SEC. Earlier this week, Crypto.com filed a lawsuit against the agency in a Texas district court, seeking declaratory and injunctive relief. The exchange requested a court ruling that it is not a securities broker-dealer under the Exchange Act, following a Wells notice from the SEC signaling impending legal action.
China’s stock-market rally may ride on Beijing’s weekend stimulus announcement
China’s policymakers disappointed investors this week with a lack of follow-through on recent monetary policy stimulus measures. They get a second chance this weekend. China’s Ministry of Finance is set to hold a briefing on Saturday local time that’s expected to deliver up to 2 trillion yuan, or about $282 billion, in fiscal stimulus to an economy that continues to stagger under real-estate woes. A briefing from the National Development and Reform Commission, China’s state economic planning body, on Tuesday failed to outline more stimulus measures, sending stocks into a skid. The China CSI 300 fell more than 3% this week, while the Shanghai Composite dropped 3.6% the Hang Seng Index in Hong Kong dropped more than 6%. Deutsche Bank estimated that the total size of both fiscal and monetary stimulus could potentially reach CNY7.5 trillion, or 6% of GDP in 2024. That would make it the largest package in yuan terms and the third largest relative to GDP, Reid said. On the fiscal side, a CNY2 trillion yuan package would be comparable in size to what the government did in its 2020 pandemic response combined with other measures.
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Tatiana Koffman
About the Author: Tatiana Koffman
Hi there and thanks for reading! If you stumble upon my newsletter, you will notice that I write about money, economics, and technology. I hold a JD/MBA and spent my career in Capital Markets working across Mergers & Acquisitions, Derivatives, Venture Capital, and Cryptocurrencies. I write to make financial topics more accessible and create equal opportunity for the next generation of investors. Currently working as a proud General Partner at Moonwalker Capital.
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