by Elizabeth Wordsmith

Created on: September 27, 2008   Last Updated: April 27, 2012

The housing market was vigorous and healthy a few years ago in my state of Florida. In fact, realtors often sold properties before they even had a chance to put them in the MLS book.

It was a great time. Many more people than ever were getting a chance to own a home and experience the American dream. Property values were going up and home equities were increasing right along with those. However, certain events merged in time to create the perfect storm for bankers and borrowers.

Those of us living along the Gulf of Mexico and the Atlantic Ocean remember the summer of non-stop hurricanes a few summers ago. We all remember Katrina. In the aftermath of those storms, there were a record number of property insurance claims paid out. As a result, homeowners' insurance premiums skyrocketed.

In addition, gas prices doubled and then tripled. This also put great financial stress on the homeowner and the business owner alike. Prices for goods and services also began to increase.

Many new homeowners had adjustable rate mortgages, and suddenly their mortgage interest rates increased at about the same time all these other things were increasing.

When insurance companies were given approval to increase rates, a study should have been done to assertain whether or not homeowners could shoulder this additional strain on their budgets. In Florida, a mortgage holder must have homeowners' insurance. It's non-negotiable and there are fewer and fewer insurance companies writing these policies for those in hurricane prone areas.

These storms not only put a burden on the homeowner. They caused a sizeable dent in community budgets, too, and raised insurance costs of protecting businesses and community property.

It seems only logical to me that if you charge more than the traffic can bear, something has to give. So, in this case, those homeowners who couldn't afford the strain of all these increases in their budgets dealt with this problem in these two ways:

1. They struggled along as best they could by putting some of these costs on credit cards. Instead, they should have sought financial advice and tried at that time to restructure their loans.

2. Homeowners flooded the real estate market by putting their homes on the market, homes that had accrued very little equity.

Florida's real estate market has often gotten a boost by people who buy second vacation or retirement homes here. But that hurricane season and the increase in homeowners' insurance costs scared many buyers away

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