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Florida home buyers are in for a shock. Property rates around the state are soaring to record highs, with annual premiums in some areas three to four times the national average.

In the last year alone, homeowner insurance rates rose 42% in Florida, and 102% in the last three years, according to the Insurance Information Institute. In 2023, the average premium in Florida hit $6,000 a year, compared to a national average of $1,700.

But it can be even higher in areas of Florida vulnerable to storms and condominium-related litigation. In Miami, insurance for a $500,000 property can easily reach close to $7,000 a year, according to local brokers.

How expensive is that? In Panama, it will cost under $1,000 to insure a $500,000 apartment. That means over 10 years, Florida homeowners will spend an extra $60,000 that they will never see again. For investors, property insurance costs at those levels can be the difference between making a profit or facing an annual loss.

The Florida situation isn’t going to get better anytime soon. The Insurance Information Institute expects double-digit increases again in 2024. 

Many factors driving up Florida insurance rates are engrained in Florida life. Hurricanes are playing a big role — a danger that doesn’t exist in Panama. Florida is also impacted by rising sea levels, rampant lawsuits, and increasing construction costs, variables that will continue to impact profitability for home builders and homeowners for years.

But Florida isn’t alone. Insurance rates — and the cost of homeownership, in general — are steadily rising in the United States. The average premium for homeowners insurance in the U.S. is predicted to reach $2,522 this year, due primarily to natural disasters, rising reinsurance costs, and higher fees for home repair, according to Insurify, an insurance-comparison platform. That would be a 6% increase from 2023 after a 20% increase over the past two years, Bloomberg reports.  

In Florida, astronomical insurance costs can have a ripple effect throughout the industry, including on HOA fees. A Tampa Bay TV station recently reported that some condo board members have seen premiums rise from around $65,000 four years ago to $800,000 this year.

Once considered an affordable market, the extra fees have made Florida one of the most expensive markets to buy a home, according to Zillow. In the South Florida region, which includes Miami, Fort Lauderdale, and Palm Beach, consumer prices in February were up nearly 5% over the prior year, compared to 3.2% nationally, according to the most recent data from the Bureau of Labor Statistics.

The rising costs for buying in Florida are wild, and often not reflected in the listing price of the home. It’s one reason we’re seeing so many buyers choose Panama over Miami these days.