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71 November 2024 J O U R N A L November 2024 » share was also highest among respon- dents in the South (20%). Many U.S. homeowners have already seen their premiums skyrocket or have lost coverage as insurers grapple with skyrocketing claims due to intensi- fying natural disasters. In a recent study, researchers at the Congressional Budget Office (CBO) reported that the higher a community's median household income, the smaller the share of properties at risk of flood- ing, and the larger the share of at-risk properties covered by an NFIP policy. Those higher-income households also received more premium discounts among properties with coverage com- pared to properties at risk in communi- ties where median household income was lower, the report revealed. As per CoreLogic, the NFIP is expect- ed to provide approximately $4.5–$6.5 bil- lion of insurance to homeowners across Florida and the southeastern United States for recovery from Hurricane He- lene. National Oceanic and Atmospheric Administration (NOAA) tidal gauges in the Tampa Bay and St. Petersburg area recorded historic tidal levels. Reports indicate extensive damage to property in the area. The Tampa/St. Petersburg area is home to a high concentration of coastal property especially commercial structures like hotels and condominiums. HOUSING MARKET 'FLIRTS WITH RECESSION' D o rising mortgage rates nec- essarily trigger an economic recession or vice versa? With six of 10 distinct housing recessions since the 1970s preceding an econom- ic recession (as determined by the National Bureau of Economic Research Business), it is tempting to answer, "yes." But real estate economists say it's not so simple. "Let's not mistake correlation for causation," said researcher and Deputy Chief Economist for First American Fi- nancial Corporation Odeta Kushi, who publishes quarterly analyses of housing market data and trends. Because the housing market is "flirting with recession," Kushi uses her latest report to delve into the complex connection between housing and eco- nomic recessions. "Contrary to what many believe, housing does not always lead economic downturns," Kushi said, granting that "the housing market is notoriously interest-rate sensitive." In a nutshell, when the country's economy overheats and inflation flares, the Federal Reserve (Fed) might raise the federal funds rates, which tends to slow the housing market, which can trigger a broader economic downturn, she said. And, reversely, when the Fed starts lowering rates, the housing mar- ket perks up and the general economic landscape follows course. But causes of economic recessions involve broader economic conditions and the Fed's response to them, she said. "A housing recession does not necessari- ly kick things off." Kushi provides evidence of a nu- anced relationship between the housing market and the overall economy: From December 1979 to January 1980, the Fed upped interest rates to combat what it dubbed the "Great Inflation." Stricter monetary policy plus rising inflation sent mortgage rates soar- ing to a record 18% in 1981 and plunged America into a housing slump as well as an economic recession. The housing market crashed again (meaning affordability, sales, and con- struction plummeted) in 1994-1995 after the Fed increased its target rate from 3% to 5.5% in one calendar year to thwart an overheating economy, but, at that time, an economic recession did not follow. The last official housing recession in 2022 was not followed by an economic recession, Kushi continued. And 2020's global economic recession caused by COVID-19 lockdowns did not cause the housing market to fall into a recession. (Quite the opposite—lower mortgage rates and the shift to remote work in- duced by the pandemic sent the housing market soaring.) As for America's current economic cycle, Kushi reports good news. "Contrary to what many believe, housing does not always lead economic downturns. The housing market is notoriously interest- rate sensitive." —Odeta Kushi, Deputy Chief Economist, First American Financial Corporation