Jerry Smith moved to Cape Coral from New Jersey because, “it was my vision of what I wanted the Florida lifestyle to be like.”

Greg Allen/NPR

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Greg Allen/NPR

CAPE CORAL, Fla. — The Atlantic Hurricane Season, which starts Saturday, is forecast to be an especially active year.

On Florida’s southwest coast, more than a year and a half after Hurricane Ian’s high winds and flooding caused more than $117 billion in damage, the fallout continues. Housing costs and insurance have spiked, prompting many to put their homes up for sale.

Concerns about hurricanes and climate change have raised questions about the long-term affordability of coastal communities like Cape Coral. The city of more than 200,000 residents near Fort Myers is on the coast, but there are no beaches. What Cape Coral does have is 400 miles of canals giving many homes direct boat access to the Gulf of Mexico.

Jerry Smith moved to Cape Coral from New Jersey three years ago during the COVID pandemic. Standing on his back patio, he looks out on his pool and tiki hut, along with his dock and boat. “If you’re living on the canal and you have access to the Gulf of Mexico, it was my vision of what I wanted the Florida lifestyle to be like,” he said.

Smith’s house received only minor damage in Hurricane Ian. But like just about everyone here, he’s seen his insurance rates go up. “The insurance industry has been tough on people here in Cape Coral,” he says. “There are significant raises in rates. And I think it’s one of the burdens that people have to really contemplate. Can they afford it?”

One thing most everyone agrees on in Cape Coral is that it could never be built today. In the late 1950’s, developers bought a 100-square-mile peninsula on Florida’s Gulf coast 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.” A marketing video at the time touted “the clean, clear air” and “the miles of blue water.”

For retirees and others relocating from the Northeast and Midwest, realtor Sam Yaffe says, Cape Coral had an advantage over places like Sarasota and Miami. “People started discovering us,” she says. “Our prices are cheaper.” In recent months though, sales have slowed in Cape Coral. Yaffe says, ”It is unusual. We do have several months’ worth of homes available.”

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 there’s another important factor. Amir Neto, an economist at Florida Gulf Coast University says, “The cost of homeownership in southwest Florida has increased. And that has pushed some people away of those coastal areas, including Cape Coral.”

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 a map. “Look at all that water,” he says. “For every home almost, there’s a canal. And as you live with water every day, if one of these storms come through, it is going to cause flooding. And the canals themselves are going to be a source of that.”

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, nearly two years after Hurricane Ian “another catastrophic event.” At a city council meeting, he said, “This could cause other families not to even be able to live in their homes because of the cost of premiums.”

Cape Coral is appealing the FEMA decision. The city recently held hearings for more than 200 homeowners suspected of violating FEMA guidelines. One of those was Sherry Oakes. Her house had only minor damage after Ian and she was able to show that at the hearing. But she’s skeptical the city’s flood insurance discount will be reinstated. “It’s actually kind of scary,” she says. “Because there are just so many things right now that are going to really increase the cost of living here.”

Oakes says she and her husband Ray already pay $8,000 a year in insurance, costs that will go up if FEMA eliminates the flood discount. It’s one reason she thinks so many homes now are for sale.” I think a lot of people that are in the flood zone don’t want to pay these astronomical prices,” she says.

Cape Coral homeowner Sherry Oakes’s home was mistakenly tagged for violations by the city despite having only minor damage.

Greg Allen, NPR

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Greg Allen, NPR

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. “We’ll hear from people, ‘The housing market’s been increasing. It’s been exploding the last few years. Climate change isn’t having any impact.’ Then they’ll pause and say, ‘But insurance is killing us.’”

Homeowner Jerry Smith agrees there’s a rising cost to living so close to the Gulf, but one he’s confident people will always be willing to pay. “The appeal,” he says. “The sun, the water. The marine life, the beach, not having to endure the winter. All those things make it worth the investment.”

Realtors say prices have dropped a little for houses on the market now in Cape Coral. But with interest rates high, more than half of the buyers now are paying cash.