[prmoustache]

So if property price drops completely because insurance do not want to insure, it should make buying houses in cash and avoid mortgage easier right? House becomes a cheap commodity, everybody can then buy a house again, insurers can insure them again because they are cheap. The market correct itself.

Problem solved?

[yardie]

"A deal too good to be true" will reveal it's ugly head in this case. Insurance wants to cover a near sure thing. You can trick buyers into buying something uninsurable, once. And then they'll be forced to sell at a large loss. Once those stories start making it into media buyers will be far more cautious.

Most likely, these houses will get bought by corporations to be rented out. They'll have the resources to self-insure. And at the next natural disaster the building falls down, renters are homeless, and what gets built in it's place will be 2x the price.

[lowercased]

They'd need to be so cheap that rebuilding (or maybe even repairing) are not things people would care to do. For a $40k house, in today's dollars, it might just be a risk I wouldn't care to rebuild if there's massive damage; just move away. Someone would have to take care of cleanup/removal though.

I see where you're going, and sort of think it could happen in some areas, but regulations might not permit that any time soon, even if 'pure' market conditions might call for it.

Interesting to think what this might do for the 'tiny house' market. Start zoning more places where people can put up $30k tiny houses. You might still need insurance for protection against personal injury on/in the property, but rebuild/repair wouldn't need to be a factor.

[marcosdumay]

There are ways to build flood-resistant houses... as long as the flood doesn't take too much of the ground away.

I have no idea what is the situation there, but there are also ways to preserve the ground against floods.

It's all about determining what is better, preventing the damage or abandoning the place.

[Octoth0rpe]

Everyone (with some degree of savings, which really isn't everyone) will be able to buy a house in an area where that housing and local infrastructure will be regularly devastated. Areas with a more amenable climate will continue to have insurable mortgages and inaccessible housing prices.

So if the 'problem' is _simply_ that people can't buy houses, I guess it's solved? If one words it more carefully - people can't buy houses that allow for a greater degree of economic stability and wealth accumulation - then no, problem not at all solved.

[japhyr]

> insurers can insure them again because they are cheap

I believe the main part of what the insurance payout covers is rebuilding. And rebuilding is what's expensive, moreso now than ever. So I think housing prices would crash in an uninsurable area because you might be able to buy cheaply, but you couldn't afford to rebuild when something happens.

In the end, we'll all be climate refugees?

[liveoneggs]

trailers are cheap to deliver

[kibwen]

Trucks haul the trailers in, hurricanes haul the trailers out, and the circle of life continues.

[dylan604]

and building codes and/or HOAs will prevent that from happening everywhere

[jasode]

>House becomes a cheap commodity,

Houses can't become a "cheap commodity" unless there are revolutionary new construction methods and/or alternative materials. E.g. something like cheap 3D printing of structural walls, ubiquitous robots, pre-fab modular rooms and roofs, etc and cheaper material alternatives to wood, concrete, tile, asphalt shingles.

Without a technological leap, traditional construction techniques will always have the baseline costs of paying expensive humans to rebuild the property. The labor costs of carpenters, plumbers, electricians, HVAC installers, roofers is ~50% or more of a house construction budget.

This means houses will always be "expensive" in relation to the average Starbuck's barista paycheck because of Baumol's "Cost Disease": https://en.wikipedia.org/wiki/Baumol_effect

Put another way, we've known for several hundred years in math that the derivative of x^2 is 2x. Disseminating that knowledge should be cheap. And yet the cost(salaries) of calculus teachers and math professors (and the associated textbooks) keep going up instead of down. That's the "cost disease" similar with building houses.

That's why a bunch of insurers abandoning the market doesn't won't change the economics enough for houses to become cheap commodities. Houses prices may adjust with lower sales prices but it still won't drop to "cheap commodities" level pricing. e.g. Florida condos' prices drastically fall because the Surfside collapse triggers law requiring millions in maintenance and rising hurricane insurance rates ... Starbucks baristas still can't afford those discounted condos.

However, to your point about "market forces" creating a new equilibrium in prices... you can buy houses in Detroit for $1 but that does come with other issues:

https://old.reddit.com/r/explainlikeimfive/comments/1ja3lm/e...

https://www.quora.com/Is-there-a-catch-to-buying-the-1-homes...

[potato3732842]

> you can buy houses in Detroit for $1 but that does come with other issues:

What neither of your links mention is that these are tax foreclosures or similar transaction and you are typically also buying the liability of back taxes owed on top of all the downsides that the links mention.

[potato3732842]

In theory, sure. In reality the racket between insurers, government and banking will find strings to pull so that that never happens. They're in on every deal. They're gonna fight tooth and nail to prevent the precedent of getting cut out.

I don't think it's fundamentally uneconomical to live in these places. It's just uneconomical in the current "nobody has any responsibility for anything it's all just financialized away" status quo in which it's ok to have plastic siding over a plastic-wood structure and shrubbery all about status quo. People will have to return to the "old ways" of corrugated steel, clapboard (or masonry or cement board) and super short grass and dirt for large distances around structures.

[alex_duf]

>Problem solved?

It depends if the problem is the insurance or the climate