The insurance crisis that disrupted Southwest Florida’s real estate market throughout 2024 is easing rapidly, with insurance quotes dropping nearly 50% from peak levels, according to Kevin Shelly, broker and owner of Kevin Shelly Realty. This sharp decline in insurance costs is stabilizing coastal property transactions that had previously stalled or collapsed due to unaffordable premiums.

Market Overview

Shelly, who has more than 20 years of experience in Southwest Florida real estate, reports that high insurance costs are no longer derailing deals. “As far as insurance goes, the best answer would be, it’s not affecting or killing deals anymore,” he said. This marks a significant change from late 2024, when insurance issues were causing transactions to fall apart across the region.

The disruption began after recent hurricanes and flooding led many insurance carriers to withdraw from the Southwest Florida market or impose what Shelly called “insane” pricing. This left property owners facing steep premiums or unable to secure coverage at all, making it nearly impossible to close sales, especially for coastal homes.

Key Factors Behind the Insurance Recovery

Several clear shifts are driving the insurance recovery in the region. More carriers have reentered the market after withdrawing due to major storm losses, which has increased competition and improved access to coverage. Insurance quotes have also fallen sharply, with prices down by nearly half compared to a year ago, making policies far more attainable for both buyers and sellers. With lower premiums and more carriers in play, transactions that would have fallen apart during the height of the crisis are now moving forward, giving the market a level of stability that was missing throughout the previous year.

Coastal Property Market Response

The easing of the insurance crisis is leading to renewed activity in the coastal property market. Properties that had lingered on the market or been withdrawn due to insurance issues are now selling. “We’ve seen a lot of pops in the coastal property market, meaning that we’ve seen some properties sell that were sitting for a long time,” Shelly said.

Owners who previously removed their homes from the market are now relisting and getting them under contract. “We’ve seen people that were unable to sell, take their properties off the market for a little bit, and put them back on recently, and getting them under contract now, when we weren’t able to before,” he added.

Addressing Climate and Hurricane Risk

Shelly acknowledges that hurricane risk remains a concern for coastal buyers, but he encourages clients to consider both recent activity and long-term patterns. “We’ve had a terrible run for the last five years. And there’s no hiding that there’s going to be risk in purchasing on the water,” he said. However, he notes that Bonita Springs experienced stretches of up to 20 years without major issues.

Recent storms have also provided clearer data on flood patterns and risk zones, allowing agents to advise buyers more accurately. “Now we know exactly where the water goes with different types of storms, where the water goes with rainstorms like Irma or surge storms like Ian,” Shelly said. This information enables buyers to make informed decisions about which properties face the most risk.

Strategic Market Positioning

The recovery in insurance is contributing to a broader pickup in Southwest Florida’s real estate market. “We are starting to see a little bit of a shift in the coastal market improvement and also the general market improvement,” Shelly said. While he cautions that the improvement has not lasted long enough to be called a sustained trend, the reduction in insurance barriers is allowing more deals to close.

Future Outlook

The combination of lower insurance costs and recent mortgage rate declines is creating more favorable conditions for coastal buyers. When rates dipped to 5.8%, Shelly observed an immediate increase in sales activity. “We had a lot of sales, like just within those few days,” he noted.

As insurance becomes more accessible and buyers see that coverage challenges are no longer insurmountable, Southwest Florida’s coastal markets are likely to see further increases in activity, especially if financing remains favorable. The recent changes suggest that insurance, once a deal-breaker, is now becoming a manageable part of the transaction process in the region.