Friday, May 31, 2024

Texass Housing Is No Longer Cheap Because ...

 Insurance is the Climate Change ‘Canary in the Coalmine’

The constant severe storms and tornadoes across Texas, Oklahoma, Kansas and beyond this year are getting more frequent.  Watching small towns leveled, trailers upended and huge ice balls hitting the ground is constant weather porn on The Weather Channel or Fox Weather.  Listening to escapees with southern accents describe their dire situations is standard. In the homeland of the neo-Confederacy, Texas, insurance rates are rising as in Florida and California, but actually are worse given its unregulated market.  Texas’ car and sprawl culture is getting its blowback by nature.  

# of climate disasters

“Texas emits more greenhouse gas emissions than any other state, according to the Environmental Protection Agency. It accounts for 14% of the nation’s climate-warming emissions, and produces more than twice the total emissions of California, the next largest greenhouse gas emitter. Texas is also the nation’s largest oil and gas producing state, accounting for more than 40% of the nation’s oil production.”

There have already been 16 disasters in Texas this year (2023) that cost $1 billion or more — a new state high for billion-dollar disasters in a single year, according to National Oceanic and Atmospheric Administration inflation-adjusted data. And that’s during a year when no hurricanes struck the Texas coast: Almost all of those weather disasters were severe storms.  Over the last two years … property losses from convective storms, which includes thunderstorms, tornadoes, hail, and heavy rains, have dramatically increased.

The impacts are being felt on homeowner’s pocketbooks: Insurance rates in Texas have skyrocketed 22% since the beginning of this year according to an S&P Global analysis of Texas Department of Insurance data.” – Texas Tribune - 11/30/23

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“According to the National Oceanic and Atmospheric Administration, between 1980 and 2023 Texas experienced an average of four natural disasters per year with damages in excess of $1 billion—droughts, floods, storms, tornadoes, wildfires, and winter storms. In recent years, such disasters have become much more frequent. Between 2019 and 2023 Texas suffered an average of eleven billion-dollar events each year, with sixteen in 2023 alone.”

Texans pay so much more than Californians thanks in part to our business-friendly regulatory environment. Unlike California, where insurance companies must seek state approval before raising rates, Texas is a so-called “file-and-use” state. Here, insurance companies can implement a rate hike first and seek state approval later—a variation on the principle that it’s better to beg forgiveness than ask permission.”Texas Monthly – 4/24/24. 

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The last big Cat 4 hurricane in Texas was in 2017, Harvey, which severely flooded the Houston area, killed over a 100 people and cost $125B.  The recent environmental disasters afflicting Texas are not from hurricanes – yet they wait in the wings, perhaps for a final knock-out blow to some insurance companies.  There is a rise in small and medium size insurance companies going bankrupt across the U.S. and especially in the South.

While Texas does not have state income taxes it does get its money in other ways like sales taxes and property taxes.  Texas property taxes used to be the highest in the nation – rising 26% between 2019 and 2023 - until state Republicans realized that was a bad look and funneled $12.7B of ‘guvmint’ money into property tax relief in 2023.  This affected how much schools and local cities could raise for taxes on property, resulting in net cuts to them.  This is also during huge spikes in Texas housing values and because of this some just saw a leveling off of property taxes. Facts from the Texas Tribune – 4/26/2024.    

Because of all these insurance and tax impacts, foreclosures and evictions are rising in the Lone Star state – mostly in Dallas, Houston, Fort Worth and Austin, according to Bloomberg.  The ‘golden hour’ is over, along with pandemic rent supports.  Some Texas conservatives want to get rid of property taxes themselves, which would put a $55B yearly hole in the state budget.  Perhaps they can go to homeschooling based on a Southern Baptist curriculum of Bible study.  They can revert to volunteer fire departments, do-it-yourself trash collection, neighborhood funded road work, and use their guns to guard their neighborhoods.

So beware that construction company asking you if you need a new roof on the insurance company’s dime because of that last hail storm. They will actually just pitch this as ‘do you want a new roof?’ Do you actually have damage that can’t be easily repaired?  In Minnesota hail storms are increasing too and it shows in the spike in Minnesota’s insurance-damage costs.  A wing of capital is starting to register the damage done, making insurance a national housing issue, not just rising rents, house prices and property taxes.  Housing is a human need and a human right, so the fact that capital cannot provide it is another sign of its demise.

Rent Control. Restrict development in ecologically sensitive areas like seashores.  Metal roofs to be mandated. Ban AirBnB and Vyrbo. National real estate insurance.  Freeze prices on housing.  Nationalize the insurance companies. Take over empty properties. Socialize the land. 

Prior blog reviews on this topic, use blog search box, upper left, to investigate our 17 year archive, using these terms: “Texass,” “The Confession” (Grisham); “A Confederacy of Dunces,” “Cranky Yankee” or “Texas.”

Cranky Yankee / June 1, 2024

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