Disaster and insurance costs are rising. The middle class is struggling to hang on

By Michael Copley,

Published November 17, 2025 at 4:27 AM CST

A person fishes next to a broken pier in Fort Myers Beach, Fla., in October. The city is still rebuilding after Hurricane Ian devastated the area in 2022. High costs for construction and insurance have made Fort Myers Beach unaffordable for many who called it home before.

Three years after Hurricane Ian slammed into Fort Myers Beach, jackhammers still echo along the barrier island's main road, where new houses and businesses are going up next to vacant lots and the shells of buildings gutted by the storm.

"We are nowhere near where we thought we would be three years ago today," says Jacki Liszak, chief executive of the Fort Myers Beach Chamber of Commerce, who owned a small hotel that the hurricane washed away. "I don't think we understood what happened to us — the extent of it."

The remnants of a home in Fort Myers Beach, Fla. High rebuilding and insurance costs have driven away longtime homeowners. "When you think about what was here and the sort of cool, old wood-framed beach cottages and stuff like that, those are all going to end up being rebuilt with new, very resilient structures. But they're going to be much more expensive," says Shelton Weeks, director of the Lucas Institute for Real Estate Development & Finance at Florida Gulf Coast University. "And, as a result, you're going to have folks come in that can afford that, the incomes are going to be higher, and some folks are going to be displaced."

The town emerging from the storm's aftermath could be out of reach financially for many who called it home before. Sky-high costs for construction and property insurance now threaten to squeeze out a lot of the family-run hotels that characterized Fort Myers Beach. And there's little hope that the store clerks and bartenders who once lived there will be able to afford it anymore. In their place, a lot of locals expect more big resorts and expensive homes fortified against hurricanes.

"That gentrification is a real thing, the change in the cost is a real thing," says Rob Fowler, president of Fowler Construction & Development, a local builder. "And it all adds up to the fact that only well-heeled players can play now."

Sally Scott hands out food at the South Fort Myers Food Pantry in Florida. The group is seeing more people struggling to afford food amid high housing costs.

Construction crews are busy up and down Estero Boulevard, the main road through Fort Myers Beach. "The locals, they're seeing a lot of concrete, stucco, a lot of stilted homes and stuff, and it's turning them off," says Joe Harrity, a partner at HM Restaurant Group. "But, you know, at the same time, it's the new building codes, it's what's going to help us rebuild in a proper manner. That's going to have a lasting impact when storms do inevitably happen again."

The changes unfolding in Fort Myers Beach are an extreme version of what's happening throughout southwest Florida. Older, wealthier people have been flocking to the region for years. That fueled an affordable housing crisis, which was amplified by Hurricane Ian. Rising prices for home and flood insurance have added to the problem, leaving working- and middle-class families struggling with the costs of living in a disaster-prone area, according to Realtors.

A home under construction in Fort Myers Beach. Jacki Liszak, head of the Fort Myers Beach Chamber of Commerce, says Hurricane Ian sped up gentrification that had started before the storm. "We were an island of family-owned and -run businesses. We had two or three chains — a Subway, a Publix — but everything else was run by families who, literally, either lived on the island or lived close by. So we're seeing, unfortunately, a loss with some of those people," Liszak says. "That demographic shift is painful to watch," she adds, "and I think you're going to see that in any community that has a disaster of this magnitude."

The challenges Florida faces, heightened by a warming planet, are playing out nationwide. Home insurance premiums across the United States have been increasing, in part because climate change contributes to more-intense storms, floods and wildfires that damage and destroy property.

Higher insurance rates can end up affecting entire towns. In southwest Florida, rising insurance costs have started to depress home values, which can drive down property-tax revenue to local governments. As property values fall, communities around the U.S. could face a "long-lasting economic shock," says David Burt, chief executive of DeltaTerra Capital, an investment research and consulting firm focused on climate risks.

In an aerial view, damaged buildings are seen after Hurricane Ian passed through Fort Myers Beach, Florida in September 2022. The hurricane brought high winds, storm surge and rain to the area, causing severe damage.

Ian fast-tracked changes in a Florida beach town

Fort Myers Beach was already growing unaffordable by the time Hurricane Ian made landfall in September 2022 with 155 mile-per-hour winds and a 15-foot storm surge.

Months earlier, Shelton Weeks, director of the Lucas Institute for Real Estate Development & Finance at Florida Gulf Coast University, had given a talk at the town's chamber of commerce. Businesses were worried. Their workers were leaving the island because older houses were being renovated or torn down, and more expensive dwellings took their place.

Nikijha Lynch-Escobar (left), a realtor and media personality in Fort Myers, Fla., says rising costs for homeowners and flood insurance are reshaping neighborhoods miles from the coast. "It's heartbreaking that you work so hard to get [a home] and now it has to go," Lynch-Escobar says. "It has to go because you can't afford it anymore." Mary Delhagen (right), a longtime Fort Myers resident, has also seen her community change after people were displaced by Hurricane Ian. "You lose friends and contacts along the way," Delhagen says. "You know, that neighbor you had in that apartment whose phone [number] you never had because you never needed it."

"Then, Ian basically hit the fast-forward button on all of that for us," Weeks says.

The hurricane damaged or destroyed most of the buildings in Fort Myers Beach. Overnight, homeowners and businesses faced a decision: How to rebuild to meet more stringent state building codes.

Then, soon after Ian, the Federal Emergency Management Agency revised flood maps for Lee County, where Fort Myers Beach is located. Most coastal properties were reclassified into higher-hazard flood zones, says Fowler, the local builder. That meant rebuilding would have to meet tougher federal standards, too, like elevating structures above expected flood levels.

Taken together, the stricter state and federal standards have added to the town's affordability problems. "There's good to it," Fowler says. "The stuff we build today is going to be that much more resilient than what we had before. The problem is it just costs a lot of money, and it takes a lot of time."

Liszak, the chamber of commerce leader, says rebuilding her five-room hotel, The Sea Gypsy Inn, would have cost as much as $4 million after Hurricane Ian. "The numbers don't work," she says, adding: "All of the boutique hotels that are on the island that were washed away, they're all in that same boat."

A volunteer working with Habitat for Humanity of Lee and Hendry Counties helps build a house in North Fort Myers. "Insurance has gone through the roof. And it has really impacted, I would say, every single person here in southwest Florida," says Karen Rodriguez, an executive at Habitat for Humanity of Lee and Hendry Counties.

Realtors warn foreclosures are looming

Hurricane Ian also added fuel to Florida's home-insurance crisis, and that's making housing even more expensive. Karen Rodriguez, an executive at Habitat for Humanity of Lee and Hendry Counties, says home insurance quotes more than doubled after the storm.

The average cost of homeowners insurance in Florida this year is more than $5,700, according to Bankrate. That's more than any state except Nebraska and Louisiana, and about $3,350 above the national average.

Flood insurance is another big expense. Along Florida's coasts, many people live in high-risk flood zones where mortgage lenders require flood coverage. Most people who have flood insurance buy it through FEMA's National Flood Insurance Program. Several years ago, FEMA began overhauling how the flood program sets its prices to better reflect risk at individual properties. As a result, the cost of federal flood insurance is surging in some places.

Tara Boyd was displaced from Fort Myers Beach after Hurricane Ian. "The cost of housing is rising, insurance is rising," Boyd says. "Unless you really have a lot of money to be able to stay down here, it's a challenge."

Several miles inland from Fort Myers Beach, Jessica Gatewood is seeing the impact of rising insurance costs in her real estate business.

One of Gatewood's clients recently sold her house after the cost of home and flood insurance climbed to about $10,000 a year. The house filled up with about five feet of water during Hurricane Ian. After it was repaired, the house took on several inches of water again last year during hurricanes Milton and Helene. Gatewood says her client was only able to sell after she spent about $20,000 on flood gates, which can rise automatically to block water from getting into buildings.

"That whole neighborhood, which probably has 200 homes, everybody's in the same boat," Gatewood says.

With so many homeowners trying to escape crushing insurance bills and the perennial threat of disaster, Gatewood says home sales in the area have slowed. In Lee County in October, the median length of time that homes were on the market was 87 days, a 26% increase from a year earlier, according to Redfin, a real estate website.

Three years after Hurricane Ian slammed into Fort Myers Beach, damaged homes and homes under construction still dot the beach.

That leaves homeowners with unaffordable insurance in a precarious spot.

"Right now, the majority of what I see is that they're pinching every penny to pay that mortgage every month," Gatewood says. "If this economy continues on like it is for another year, yeah, for sure, we're going to have a lot of foreclosures."

While homeowners scrape by, the value of a lot of their houses is falling. In October, the average home value in Lee County was down more than 10% from a year earlier and more than 16% lower than in August 2022, the month before Hurricane Ian hit, according to the real estate website Zillow. Rising insurance costs seem to be driving the decline in home values, says Weeks of Florida Gulf Coast University.

Rev. Arthur Jones of the Unitarian Universalist Congregation of Fort Myers says people are moving away from the area "because they're tired of having to rebuild. They're tired of the high costs. They're tired of the anxiety that comes from hurricane season."

'Little by little, you're going to see everybody going away'

Renters are getting pinched, too, as landlords pass along some of the increased costs they're paying for property insurance.

Melyssa Caballero moved to Lee County in 2022 when she was priced out of Miami. Since then, rent for the one-bedroom apartment she shares with her husband has more than doubled. Unable to save, Caballero says she's thinking of leaving Florida after watching her niece move away a couple years ago and find cheaper housing in Ohio.

"Little by little, you're going to see everybody going away," says Caballero, the office administrator at a church in Fort Myers, about 13 miles northeast of Fort Myers Beach. "Anybody that doesn't have that money — enough to be able to pay rent — people are going to have to move."

Melyssa Caballero, the office administrator at the Unitarian Universalist Congregation of Fort Myers, is thinking of leaving Florida in search of more affordable housing. "Sometimes it makes me cry," she says, "because it's not going to be the same [as] being here."

In its latest migration report, the Florida Chamber of Commerce said almost 511,000 people moved out of the state in 2023, the most ever. About a quarter of those who left were between the ages of 20 and 29 — young workers who are critical for a growing economy.

High housing costs were the main reason people moved away, the chamber said.

Robert Gordon, a senior vice president at American Property Casualty Insurance Association, an industry group, says Florida was plagued in recent years by "legal system abuse" as homeowners and contractors tried to make insurers replace functioning roofs after storms. Insurers have faced similar cases of what Gordon describes as "fraud" in other states, which he says has contributed to rising costs.

After Florida lawmakers took steps to limit insurance litigation, the average rate for homeowners insurance in the state rose by 1% this year — the smallest increase nationwide, Gordon says.

But the underlying risks are still there. "We've seen more people moving into coastal [areas], building bigger, more expensive buildings. We've seen the climate severity increase," Gordon says. "So all of those are going to add to the insurance costs."

A beachfront house is seen in Fort Myers Beach. The average cost of homeowners insurance in Florida this year is more than $5,700, according to Bankrate. That's more than any state except Nebraska and Louisiana, and about $3,350 above the national average.

Racing to rebuild before the next storm

At Fort Myers Beach in October, Dixie Fish Co. was packed at dinnertime. Another restaurant bustled with staff preparing to reopen. Construction workers pulled apart a crumbling building. As the sun set, people lounged on the beach, some perched on pilings of the town's broken pier. A couple danced in a plaza nearby.

"I still think that this island is going to come back," says Scott Safford, a town councilman who's married to Jacki Liszak, the head of the chamber of commerce. "And the guys that are investing now, that are stakeholders now, are going to reap the rewards."

The sign from The Sea Gypsy Inn leans against a wall in Scott Safford's office in Fort Myers Beach. According to his wife, Jacki Liszak, rebuilding the five-room hotel, would have cost as much as $4 million after Hurricane Ian.

Still, a lot of Safford's friends have given up and moved inland, or back to North Carolina or Wisconsin or wherever home was before. He worries the mom-and-pop businesses won't come back, and that more national chain brands will move in, like Starbucks and the Margaritaville resort that opened a couple years ago with hundreds of guest rooms.

Safford knows, though, that the town needs investment.

People watch the sunset in Fort Myers Beach in October. "There is nowhere like Seven Mile Island, Fort Myers Beach," says Jacki Liszak, head of the local chamber of commerce. "You go over that bridge, it catches you, and you feel home. And people will come here, and they will build, and they will stay."

"I'm worried about our financial feasibility long term," Safford says, leaning back in a chair at his vacation-rental company. The sign that used to hang at The Sea Gypsy Inn is propped against a wall. "We're going to need development to sustain the tax base."

The town also needs some luck with the weather. At a waterfront restaurant, Liszak says she's scared another big storm will come before they're ready.

"That will chase away all the investors, that will chase away the people who do want to come and live here for their little piece of paradise," Liszak says. "And that will economically set us back another five to 10 years."