The Real Stranded Assets of Carbon Lock-In: Florida’s Real Estate Market After Two Hurricanes

This is the fifth installment of "The Real Stranded Assets of Carbon Lock-in" article series.

Florida has just endured two powerful hurricanes: Hurricane Helene and Hurricane Milton, both of which caused widespread destruction across the state. Hurricane Milton, which made landfall on October 9, 2024, near Siesta Key as a Category 3 storm, brought 120 mph winds, intense storm surges, and flash flooding that wreaked havoc on Florida’s Gulf Coast. While the immediate physical damage from these storms is massive, a deeper and more troubling consequence is beginning to surface: the risk of vast portions of Florida’s real estate market becoming "stranded assets."

Beyond the Storm: Long-Term Implications for Florida’s Real Estate Market

The idea of stranded assets traditionally applies to fossil fuel investments rendered worthless by climate policies, but in Florida’s case, coastal real estate is facing a similar fate. The cumulative effects of Helene and Milton are revealing just how vulnerable Florida’s coastline is. Experts estimate that over $30 billion in damage was caused by Hurricane Milton alone. Combined with the economic toll of Hurricane Helene, homeowners and investors are beginning to question the long-term viability of properties in high-risk areas.

Insurance and Lending Markets Are Reeling

As climate risks escalate, insurers have been retreating from Florida’s market. The state's insurance premiums have surged by over 40% in recent years, and many private insurers have outright refused to cover properties in high-risk areas. This withdrawal is leaving property owners reliant on the state-run Citizens Property Insurance Corporation, which now insures more than 1.5 million homes Even so, the state's insurance pool faces significant risk, potentially stranding billions of dollars in real estate.

Adding to the complexity, mortgage lenders are tightening their terms for coastal properties. Without adequate insurance, many lenders are reluctant to finance these homes, exacerbating the likelihood that properties in vulnerable zones will lose value over time, further stranding assets.

Can Florida Adapt?

While Florida’s resilience is commendable, there are growing concerns about the sustainability of rebuilding efforts. With each storm, the cost of adaptation rises—building elevated homes, constructing seawalls, and implementing flood defenses—all of which are incredibly expensive. Cities like Miami and Tampa are already investing in adaptation strategies, but the scale of the challenge is daunting.

Under the 50% Rule, homeowners who suffer significant hurricane damage—where repairs exceed 50% of the building's market value—are required to bring their properties into compliance with modern flood protection standards. This means expensive modifications such as elevating homes or installing flood-proof materials. One Florida homeowner hit with the 50% Rule after Hurricane Ian in 2022 was required to elevate their house to meet new building codes. The cost of compliance far exceeded their budget, making it impossible to rebuild affordably

For many homeowners like this, the financial burden of meeting codes is daunting. Though necessary for long-term resilience, the codes often force residents to choose between costly upgrades or selling their property altogether. However, homes that can't meet the standards risk becoming uninsurable and unsellable, effectively turning them into stranded assets.

Unless major changes are made, Florida’s real estate market faces a grim future. The state’s economic reliance on its coastline could ultimately transform these once-prime properties into liabilities—stranded assets of a warming world.

As climate risks intensify, Florida's situation serves as a stark reminder of how vulnerable real estate markets are to the impacts of climate change.

For more insights into the concept of stranded assets and carbon lock-in, check out the full article , "The Real Stranded Assets of Carbon Lock-in."