This article originally appeared in the International Right of Way Association Sunshine Chapter No. 26 Florida in July 2023 and was written by Peter D. Waldman.
What do you consider to be the most important issue today in regard to the valuation of residential real estate as relates to acquisition of property for right of way projects?
In answering this question it would be easy to say that rising interest rates, and the pressure that interest rates place on demand, which impacts value, is the most important issue today impacting the valuation of residential real estate, but I think the issue that is going to have the most long term impact on residential real estate values in Florida is the cost of insurance. Anything that impacts the cost of residential real estate will have an impact on value, and long term I think the greatest rise in cost impacting residential real estate is insurance.
The cost of residential property insurance continues to rise as a result of various issues including some of the storms that have hit Florida over the last several years, the aging of residential condominium stock, and the increase in flooding in various coastal areas within the state. In some places residential insurance is potentially so expensive that it is not in line with the value of the housing stock in those areas. It is important to note that if you have a mortgage on your property insurance is going to be required.
As the cost of insurance becomes more and more expensive the number of potential buyers decreases. When demand decreases there is typically a downward pressure on price. If we are not able to remedy the ever increasing cost of residential property insurance it will most likely have an impact on the affordability of residential real estate, which can also have an impact on local tax revenue, some of which is needed for right of way projects.
To read the original blog post in the International Right of Way Association Sunshine Chapter No. 26 Florida, click here.
