“No one should be lending for 30 years in most of Florida,” financial climate analyst warns

Rising insurance premiums could lead to an economic crash in the Sunshine State, according to one expert

May.May 15, 2019 02:30 PM
Hurricane damage in Florida (Credit: iStock)

Hurricane damage in Florida (Credit: iStock)

Real estate lenders and investors are ignoring the rising threat that climate change poses in Florida, which could spell disaster for the state’s economy, according to an expert on climate change’s impact on financial markets.

By continuing to provide mortgages and by buying long-term debt, financial institutions are ensuring Florida’s economy can “go to hell,” said Spencer Glendon, who studies the impact of climate change around the world, Bloomberg reported. He spoke during an investment conference in New York last week.

“No one should be lending for 30 years in most of Florida,” Glendon said, according to Bloomberg. “During that time frame, insurance will disappear and terminal values,” which is future resale income, will shrink, he said. “I tell my parents that it’s fine to rent in Florida, but it’s insane to own or to lend.”

Concern over exorbitant insurance policies could kickstart an economic crash, impacting home sales and property tax revenue that would be used to finance infrastructure improvements, Bloomberg reported.

Florida’s bonds should sell at a discount compared to similar bonds in less risky markets, but they are not, according to Bloomberg. Miami Beach raised its $162 million bond debt, similar to Charlotte, North Carolina.

“A rising share of muni bond issuance over time will likely come from regions facing economic losses from rising average temperatures and related events,” according to a 20-page report that BlackRock published last month. Nearly 60 percent of U.S. cities will have climate-related damages that come out to 1 percent or more of the gross domestic product by 2060 to 2080. [Bloomberg]Katherine Kallergis

Related Articles

Rendering of Sailboat Bend II

Affordable housing project in downtown Fort Lauderdale lands $27M loan

Sea level rise video

WATCH: Developers and brokers weigh in on Miami sea level rise

Daily Digest Miami

Quiksilver signs a lease in Miami Beach, Delray Beach’s Atlantic Crossing announces first retail and office tenants: Daily digest

From left: Nelson Gonzalez, Riley Smith, Jill Hertzberg, Dora Puig, Jim McCann and Dina Goldentayer

South Florida dodged a bullet with Hurricane Dorian. Here’s what that means for the resi market

Miami skyline (Credit: iStock)

SoFla real estate deals on hold: Insurers delay closings ahead of Hurricane Dorian

Rendering of the Brickell hotel development, Tony Cho and Robert Finvarb

Finvarb and Cho land construction loan for mixed-use hotel near Brickell City Centre

Developer borrows $105M, breaks ground for mixed-use Flagler Village project

Developer borrows $105M, breaks ground for mixed-use Flagler Village project

Neiman Marcus CEO Geoffroy Van Raemdonck (Credit: Getty Images)

Struggling Neiman Marcus scores loan from Credit Suisse for Coral Gables store