Why potentially increasing residential construction cost per square foot creates savings in the long-run
Florida is the poster child for why building codes can greatly increase community resilience, help retain home values, reduce insurance costs, and decrease mortgage delinquency risks.
As a state, Florida has seen some of the largest in-migration in recent years. It has also seen the effects of climate change. According to research using CoreLogic’s Climate Risk Analytics, the Sunshine State has the highest percentage of census tracts with high- to extreme-risk in terms of exposure to natural perils, which include wildfires, floods, hurricanes, and storms.
This hurricane exposure and the associated risk is not new in Florida. In fact, the state has worked for years to implement some of the most stringent building codes to help mitigate the effects of natural hazards.
From 2018 to 2023 Florida ranked first for building code adoption, enforcement, and contractor licensing, according to a report from the Insurance Institute for Business & Home Safety (IBHS).
Despite the slight drop in rank in 2024, decades of building code enforcement have had a positive effect. In the wake of Hurricane Ian, the Insurance Institute for Business & Home Safety (IBHS) estimated that codified building protections prevented between $1 billion and $3 billion in damage to just single-family homes in Florida.
Read More About the Florida Property Market
Building for In-Migration: Florida Building Codes
Since Hurricane Ian made landfall in 2022, the population of Florida has continued to grow. Already the third most-populous state, between 2022 and 2023, Florida had four of the nation’s top five fastest-growing metropolitan statistical areas, according to the U.S. Census Bureau.
This fast population growth has coincided with enormous home price growth. During the same year period, the median price of a single-family home in the Miami metro area grew by 9.9%, reaching $471,196, according to CoreLogic data.
However, the fast home price appreciation in Florida does appear to be cooling as the state contends with the rising cost of homeowners’ and flood insurance.
Mitigate Future Losses With Upfront Costs
Recently, insurance in Florida has been making headlines. As insurers strive to assume the risk of underwriting homes in natural disaster-prone areas, premiums have skyrocketed.
However, many insurers are also working with homeowners to both lower premiums and increase the resiliency of homes. From upgrading roofing materials to adding hurricane shutters, there are many small adjustments that homeowners can take to decrease insurance costs.
Flood insurance costs — which are not typically a part of standard homeowners’ insurance policies — can be similarly reduced through mitigation.
In fact, if builders adhered to the latest edition of the International Codes (I-Codes), communities could avoid more than $600 billion in cumulative disaster losses by 2060.
$1 Spent Today
=
$11 Saved Tomorrow
Jon Schneyer, CoreLogic’s Director of Catastrophe Response
New Listings Put the Brakes on Home Prices
According to CoreLogic’s most recent S&P Case-Shiller Index, the Florida market softened this spring. Inventory improvements in the state have led to a rapid deceleration in home price growth.
Florida is one of the leading states for new listings and new housing starts in the U.S. It is also a state that leads the nation for the number of landfalling hurricanes. Therefore, it is no surprise that new construction is required to adhere to modern building codes focused on mitigation and resilience.
Of course, building a structure to a stronger building code usually means it is more expensive. But homeowners and insurers should take a longer view when considering why investing in upgraded materials and updated building practices is a worthwhile investment.
“This goes back to the old adage that $1 spent upfront saves you $11 down the road,” explains CoreLogic’s Director of Catastrophe Response Jon Schneyer. “That savings is not just in terms of the damage. It also means homeowners will save every year when paying premiums.”
By building for resilience in the face of storms, homeowners and insurers also set themselves up to save on any future reconstruction costs.
Hurricane Michael in 2018 is a memorable example of the power of building codes. While the storm leveled the surrounding area, there was a single home left standing on Mexico Beach.
Mortgage Payments Are Also Affected
In addition to building codes mitigating physical property risk during a landfalling hurricane, they can also help mitigate financial losses. Specifically, homes built to code limit the risk of mortgage default over 90 days following a damaging event.

In a joint study between CoreLogic and the IBHS, researchers found that homes built after 2010 had some of the lowest 90-day-plus mortgage delinquency rates. Homes built between 1978 and 2002 had some of the highest 90-day-plus delinquency rates. Florida adopted the Florida Building Code in 2002, which is one of the strictest in the nation, after Hurricane Andrew underscored the consequences of inadequate construction practices in the state.
Why Are Building Codes Important?
If Florida’s population continues to boom, the need for building codes will continue to increase.
With more homes and more people in this popular migration destination, density will lead to more exposure for insurers writing in that area. Couple this with climate change and inflation pressures, and it pays to encourage precautionary construction.
While additional expenses due to building codes and insurance requirements may dampen price growth, they will allow for coastal communities to be more resilient when weathering the inevitable storm.
“If we’re not going to move away from the coast and we’re not going to stop building in these beautiful areas, at the very least, let’s strengthen the homes so that when these disasters do happen, we can move right back in,” says Schneyer. “We can go back to our normal lives, and we don’t have to spend billions rebuilding after a hurricane.”
Tracking Natural Disasters Affecting the Insurance Industry
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