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The Atlantic hurricane season starts tomorrow. It's forecast to be an especially active year. And in Southwest Florida, slammed by Hurricane Ian in 2022, housing costs and insurance have spiked, prompting many to put their homes up for sale. NPR Greg Allen reports that catastrophic storm has raised questions about the long-term affordability of coastal communities like Florida's Cape Coral.
GREG ALLEN, BYLINE: It's right on the coast, but there are no beaches in Cape Coral. What it does have is 400 miles of canals, giving many homes direct access by boat to the Gulf of Mexico. Jerry Smith (ph) moved to Cape Coral from New Jersey three years ago. When I ask why, he takes me out of his back door, where he has a pool, a tiki hut and a dock with a boat.
JERRY SMITH: If you're living on a canal and you have access to the Gulf of Mexico, you - it was my vision of what I wanted the Florida lifestyle to be like.
ALLEN: Smith's house received only minor damage in Hurricane Ian, but like just about everyone here, he's seen his insurance rates go up.
SMITH: The insurance industry has been tough on people here in Cape Coral. I think there's significant raises in rates. And I think it's one of the burdens that people have to really contemplate. Can they afford it?
ALLEN: One thing everyone agrees on in Cape Coral is that the community of more than 200,000 people could never be built today. In the late 1950s, developers bought a 100-square-mile peninsula near Fort Myers, where they bulldozed mangroves, drained wetlands and dug hundreds of miles of canals. It was a classic Florida real estate venture with lots sold on the installment plan and advertised as a waterfront wonderland.
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UNIDENTIFIED PERSON: Today's new city of Cape Coral is an unforgettable experience - the clean, clear air.
ALLEN: Realtor Sam Yaffey says, for retirees and others relocating from the Northeast and Midwest, Cape Coral has an advantage over places like Sarasota and Miami.
SAM YAFFEY: People started discovering us. Our prices are cheaper.
ALLEN: In recent months, though, Yaffey says sales have slowed in Cape Coral.
YAFFEY: It is unusual. We do have several months' worth of homes available.
ALLEN: The main reason for the cooling of the once hot Cape Coral home market is mortgage interest rates, now at a 20-year high. But Amir Neto, an economist at Florida Gulf Coast University, says there's another important factor.
AMIR NETO: The cost of home ownership in Southwest Florida has increased, and that has pushed some people away off those coastal areas, including Cape Coral.
ALLEN: Spiking insurance rates are a big part of that. A study by a research group, First Street, found that Cape Coral has more properties at risk of flooding than any other city in Florida. Jeremy Porter with First Street says to understand why, you just need to look at a map.
JEREMY PORTER: Look at all that water. I mean, there's canals. For every home almost, there's a canal. And as you live with water every day, if one of these storms comes through, it is going to cause flooding and the canals themselves are going to be a source of that.
ALLEN: Following Hurricane Ian, FEMA is now reevaluating the risk of homes in several communities in Southwest Florida, including Cape Coral. The federal agency recently announced it's pulling the city's long-standing discount on flood insurance. The decision related to what FEMA said was improper rebuilding after Ian would immediately raise flood insurance rates by 25%. Cape Coral's mayor, John Gunter, called the FEMA action another catastrophic event.
JOHN GUNTER: Unfortunately that we had a Category 5 hurricane. But this could cause other families not to even be able to live in their homes, just because of the cost of premiums.
ALLEN: Cape Coral is appealing the FEMA decision. The city recently held hearings for more than 200 homeowners suspected of violating the FEMA guidelines. One of those was Sherry Oaks (ph). Her house had only minor damage after Ian, and she was able to show that at the hearing. But she's skeptical of the city's flood insurance discount will be reinstated.
SHERRY OAKS: It's actually kind of scary because there's just so many things right now that are going to really increase the cost of living here.
ALLEN: Oaks says she and her husband Ray (ph) already pay $8,000 a year in insurance, costs that will be going up if FEMA eliminates the flood discount. It's one reason she thinks so many homes now are up for sale. The cost of insurance is expected to keep rising. By 2050, because of more powerful hurricanes and the rising sea level, Jeremy Porter with First Street says nearly every single home in Cape Coral will face flood risk. Insurance, he says, is beginning to reflect the impacts of climate change.
PORTER: We'll hear from people, you know, the housing market's been increasing. It's been exploding for the past couple of years. Climate change doesn't have any any impact. And then they'll pause, and they'll say, but insurance is killing us.
ALLEN: Homeowner Jerry Smith agrees there's a rising cost of living so close to the gulf, but one he's confident people will always be willing to pay.
SMITH: The appeal, the sun, the water, the marine life, the beach, not having to endure winter - all those things make it worth the investment.
ALLEN: Realtors say prices have dropped a little for houses on the market now in Cape Coral. With interest rates high, more than half of the buyers now are paying cash.
Greg Allen, NPR News, Cape Coral, Fla.
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