Following are some emails from George Pintye, yet another real estate broker contact of mine from Florida. A few links, comments, and one image were added by me.

I am a Real Estate agent in Hernando County, Florida and a confirmed Bubble-ite.

I'm writing in hopes you will consider addressing an issue of paramount concern for the Florida Housing market on your blog: the coming Hurricane season and the perilous position of the Homeowner's insurance industry in Florida.

It's an item that doesn't get much coverage outside of Florida, but the consequences may be national if it comes to pass.

As you may or may not know, many major insurance companies have decided to limit their exposure in Florida over the past few years and have dropped policies in high risk areas. Allstate and State Farm in particular are proceeding with a systematic & orderly withdrawal from the state.

Its not just claimants of hurricane damage that find themselves dropped, often long-time policy holders who never filed a single claim, but happen to live along the coast get their notice of termination out of the blue. Many of us with private coverage are grateful we haven't been kicked to the curb (yet) by our respective insurers and absorb the yearly hikes without complaint because we know the alternative of Citizens coverage is much worse.

Citizens, as you may know, was created as an Insurance company of "last resort" following Hurricane Andrew. It was never intended to be what it has become: the primary insurer of new & resale home purchases along coastal Florida. By all estimates, it is in trouble.

According to the Florida Insurance Council Citizens Property Insurance is now facing a deficit of more than $1.7 billion for the 2005 hurricane season, three times the $516 million deficit from 2004 that produced a 6.8 percent statewide assessment. In addition, the Florida Hurricane Catastrophe Fund confirmed it will face a deficit from 2005 as well, currently projected at $264 million. So, even without a single hurricane coming through this year, Citizen's policy holders can already count on a bump in their premiums next year. Not like the 60-100+% yearly increases they've had to weather the past two years wasn't bad enough.

Mish, 2006 might be a watershed year for my state. Even without the threat of an active Hurricane season, property values are destined to head south because of rampant overbuilding & irresponsible speculation. What will happen though if Citizens is overwhelmed by claims from a major catastrophe? They can't keep passing the cost onto the policyholders, simply because those policyholders are already stretched to the limit financially, especially elderly on a fixed budget.

Will the federal government step in? Will the private carriers be forced back into writing policies? What happens to property values if the entire insurance industry collapses under the weight of a major catastrophe (or heck, even a couple of moderate ones) because loan availability declines significantly?

It won't take much, I assure you, to push Citizens Property into insolvency. There are still people with outstanding claims from 2004 that have yet to receive their checks from the company, and here we are in 2006 facing a Hurricane Season that by all accounts will be just as active as last year.

I hope you can find the time to address this issue on your website, as it is already impacting the housing market in my state, and hangs like a specter over Florida's future.

Thank you for your time,
George Pintye

George followed up with a piece on sinkholes. Some names and situations in the following email were removed or changed by me to protect the innocent (or do I mean guilty). I also added links and an image.

Since I emailed you earlier this morning, I found out that a good friend of ours just got a notice from his insurance carrier today. They will not be renewing his policy once it's up in June (guess they'll take a pass on this Hurricane season). He paid $1,500 last year for her policy just to give you some perspective. Many people are paying between $2-3k/year for coverage through Citizens, and we're a relatively average county with a median home price near $200,000.

In addition, our county has an inordinate number of sinkhole issues which are also causing the insurance carriers to run for cover. And these sinkholes are being made worse with the dry winter and spring we've been having. To my knowledge, if you buy a house in Spring Hill, FL you can't find a private carrier anymore. State Farm will put you on a waiting list that is about 2 years long.

Here's an article about a recent slew of sinkholes forcing families out of their homes.

SPRING HILL - The first sinkhole tore a 40-foot gash in the ground early Friday afternoon. Then another appeared across the street, and still another on a nearby property.

By the end of the day, six sinkholes had cracked roads, swallowed the back end of a cement truck and threatened the stability of as many as 10 homes in this southwest Hernando County neighborhood.

The sinkholes forced four families to evacuate and rattled other residents in an area already reeling from hundreds of sinkholes and the corresponding spike in insurance rates.

Oh, and did I mention we're a true bubble area? For years, Hernando County was a refuge for retirees. But in the last two years, home values have doubled and speculators have overbuilt like you wouldn't believe. We're running about an 18 month inventory of new (what I define as 2005-2006 built) houses, and that's just what's in our MLS. That number doesn't include the hundreds of builder spec homes, FSBOs, and homes still under construction.

And its not if my area needed this insurance fiasco. We already are destined to have a rough time during the coming housing downturn. Our main industry is, you guessed it, housing. We don't have much of a local economy save for service & retail. We don't manufacture much to my knowledge, and people certainly don't move here for the job prospects. We lost most of our Tampa area commuter-buyers last year when gas hit $3/gallon. Hell, its practically that high now. Many agents are already withering on the vine as the number of buyers dries up.

It's the perfect storm of calamity for any real estate market, and we are at the center of it.

I appreciate you considering my suggestion for blog piece. In the future, I'd be happy to keep you apprised of the situation down here, though I think the two of us know which direction its headed.

Best Regards,
George

Just in time for Easter I received this update from George about Citizens.

Hello again Mish,

I wanted to send you a couple more articles on the calamity that is Citizens Property Insurance. I guess whenever you hand over the reigns to government, it will always find a way to screw things up. Compare and contrast Millionaires Bank On Citizens with Too much fraud, too few remedies for Citizens.

On one hand, you have the rich getting a discount, and on the other, you have the middle class getting squeezed out of homeownership. It's truly mind-boggling. Why I haven't seen this issue brought to national attention is beyond me. It's more intriguing than Enron ever was, and the fallout after a possible Citizens collapse would be even more devastating.

Thanks again and enjoy your weekend,
Best,
George

Thanks George!

And as long as we are talking about Florida, let's take a good hard look at Panama City Beach where Sales as hot as afternoon sand cool down.

Several developers have put plans on hold in this Florida Panhandle town, some after starting construction, waiting for better times. Condo prices have -- hold onto your beach umbrella -- stagnated or even dipped. Much of Panama City Beach is for sale.

A year and a half ago there might have been a handful of beach condo units on the market, real estate agents say. Now there is a backlog of over 2,200. More than 250 of them are listed for $700,000 or more. Look-alike half-million-dollar units are for sale up and down the strip.

Many blame a building frenzy that outpaced even the feverish speculative buyers who swarmed here from places like Birmingham and Atlanta, a six- or seven-hour drive away. The median price for condos sold in Bay County leapt 130 percent from 2003 to last year. But when the potential for quick profit didn't continue to soar, the market sputtered.

About three years ago, Darrin Quick, a Dunwoody software salesman, put money down on three condo units in planned towers.

He bought in early, in the low $200,000s, and watched the price of units like his triple and then dip, though he says they remain above what he paid. He still expects to be able to sell the condos -- still under construction -- at a comfortable profit.

He's not worry-free, though. He was glued to the Weather Channel, gut clenched, every time a hurricane twisted off the coast last year. He expects the towers to survive a storm, but he worries about temporarily losing the beach's brilliant sand and area restaurants. Hurricane predictors say a current cycle of stronger and more frequent storms could last 20 years.

"My other big fear is that they may be overdeveloping" the Panama City Beach area, Quick says. "You kind of hate to see it turn into a South Beach thing with high-rise after high-rise."

Real estate agents in the Panama City Beach area say some banks are putting fresh limits on pre-construction sales in hopes of avoiding investors' becoming overextended.

A few developers are scrambling to sell their in-progress projects or trying to recruit partners to get them over the financial hump, says Zepponi, the real estate agent. Other projects have been halted. Motels or other businesses that were closed after they were sold to make way for development sit vacant.

Miracle Strip Amusement Park, once a staple for beach tourists, is among the closures where construction of a development that includes condos has yet to begin. Club La Vela, a giant nightclub known for wet T-shirt contests, remains open after plans for a condo tower there fell through.

Says Janet Roan, a local real estate agent, "Now is the time to buy. It's a buyer's market."

Zepponi advises condo owners to avoid putting their units on the market now if they can avoid it.

"If people would stop this panic, things would turn around sooner," she says.

Check out some of the quotes from that article. They are priceless.

• "My other big fear is that they may be overdeveloping"
• "Now is the time to buy"
• "If people would stop this panic, things would turn around sooner"

Where do these dimwits come from?

Now is NOT the time to buy. Perhaps 3 or 5 or even 8 years from now will be the time to buy but certainly not now.

Check out the fear that they "may" be overdeveloping. Is there any freaking doubt about it? By the way, his big fear is misplaced. Since that buyer's condos are still under construction his big fear ought to be that builder goes bankrupt and just walks away leaving a bunch of totally worthless half built towers standing as a monument to stupidity.

Stop the panic? Pray tell when did it start?

Let's make a list of Florida attractions.

1. Hurricanes. check
2. Sinkholes. check
3. Condo Mania. check
4. Unsustainable Appreciation. check
5. Clueless Snowbirds. check
6. Wells Running Dry. check
7. Earthquakes. no
8. Unbearable Heat and Humidity. check
9. Insurance Problems. check
10. Mudslides. no
11. Termite Problems. check
12. Severe Affordability Issues. check

Florida is ground zero for housing bubble fallout, but rest assured the problem will spread. Trapped buyers have not yet begun to panic. They will.