For homeowners in Florida, there are beginning to be some difficulties showing up, and the situation may be even bleaker for people who’d like to buy a home in the Sunshine State. One of the major issues rocking homeowners in Florida is the fact that major property insurance companies are leaving the state. Homeowners and buyers will face higher costs as a result, paired with ongoing inflation.

Earlier in July, Farmers Insurance said it was leaving Florida, with its pullout meaning it would discontinue new coverage for home policies. Farmers was the fourth major insurance company to leave Florida in the past year. Most said they were doing so because of an increased risk of extreme weather events, namely hurricanes, that have become more common or severe in recent years.

According to the Associated Press, there were at least six insurers that went insolvent in Florida last year, showing their concerns are warranted.

Cristin deRitis, the deputy chief economist at Moody’s Analytics, told Newsweek the growing risk of property damage stemming from hurricanes and high inflation is pressuring insurance companies and homeowners. The rising frequency of intense storms means annual insurance premiums are increasing. That’s paired with higher building material costs and increasing construction worker wages, which further puts upward pressure on premiums for insurance loss coverage.

Florida is one of the country’s leading hotspots for inflation, with more than 2.5 million residents in the major Miami-Fort Lauderdale area facing a 9% inflation rate for the 12 months that ended in April. This is from new data cited by CNN from the Bureau of Labor Statistics.

The annual core inflation rate nationally for the 12 months ending in June was 4.8%, and in May, it was 5.3%, according to the BLOS report.

The higher inflation in Florida is largely due to the influx of new residents since Covid, including retirees and remote workers. The growing population in the state is moving housing prices upward, and that’s expected to be impacted by the insurance crisis.

Jeff Tucker, a senior economist at Zillow, said insurance companies withdrawing from Florida means there will be fewer options for residents, which can increase insurance prices. Higher home insurance costs mean the total cost of homeownership will also probably go up.

Buyers will have to think about these increasing home insurance rates when calculating monthly payments.

If you thought, for example, you should budget around $150 for homeowners insurance, that should now be closer to $400 a month to account for increasing prices.

Moody’s Analytics is predicting Florida’s home prices will fall or grow less quickly than they would have otherwise as homebuyers are weighing additional expenses. Along with higher premiums, homeowners will have to deal with the rising costs required to protect their homes against future storms.

Over the long term, if enough insurers leave the state, it could prevent buyers from being able to get mortgages, or it could eradicate a sense of confidence to buy homes in Florida.

Despite this worrisome news, Zillow reports that, at least for the time buying, homebuying demand in Florida has stayed strong. Florida is still considered a desirable place to live, but the cost of living increases also can’t be ignored.

Homeowners in Florida pay an average of over $4,200 a year for home insurance—that’s triple the national average of $1,700.

There are some options for homeowners facing a struggle, though. State-sponsored insurance plans in Florida are considered insurers of last resort. Also, since lenders require borrowers to have insurance on a mortgaged property, if there’s a lapse in coverage or it’s canceled, lenders will buy a policy on the customer’s behalf. This is known as lender-placed coverage. Both state-sponsored insurance plans and lender-placed coverage have higher premiums, and the coverage tends to be more restrictive than what you’d typically have in the private market.

When traditional insurers refuse to write policies in high-risk areas, additional costs that come with the more expensive options could impact home prices negatively. This is because buyers have to think about these higher costs in the same way they do other recurring expenses like paying property taxes and mortgage payments.