Editor’s note: We hope you saw yesterday’s special afternoon edition of Weiss Ratings Daily with a special warning about the insurance industry from Dr. Martin Weiss. If not, you can read that here.
Today, we have yet another solution to the skyrocketing insurance premiums from someone who is an expert on how to protect your wealth — Ted Baumann.
Ted is a celebrated economist and bestselling author. One with a deep well of experience in investing overseas. Here he is with another solution to this giant problem …
By Ted Baumann
For generations, the American home has been the largest store of wealth for most of us.
It provides a roof over our heads. And rising property values make it a perfect way to save for retirement.
Millions of Americans finance their retirement and medical needs from reverse mortgages or property sales. And, of course, we pass some of that wealth on to our heirs.
For generations, owning property has been the key to our safety, comfort and security.
But for some, all this is ending.
And the way to avoid the consequences may lie outside the United States.
The reason is straightforward.
In 2022, the U.S. experienced 23 natural disasters that led to insurance payouts of a billion dollars or more.
The number increased to 28 in 2023, with a total cost of $92.9 billion for the insurance industry.
In 2024, just two hurricanes led to over a billion dollars’ worth of claims in Florida and other southeastern states.
U.S. property insurers simply cannot continue like this. And their decisions are going to pull the rug out from under the housing equity of millions of vulnerable Americans … especially retirees.
But there is a solution, and I’m going to spell it out for you.
Switch Markets
Americans have built their wealth by climbing the so-called “property ladder.” That ladder may now have an extra rung … one that takes you overseas.
Housing fulfills two needs.
It’s a place to live.
It’s a store of wealth.
It also provides a side benefit: It can generate cash yields through rental income.
But the increasing frequency and severity of natural disasters in the U.S. mean that all three of these features are under acute stress.
People living in areas with inadequate or nonexistent insurance stand to lose their homes. The impact of rising insurance costs on house prices means equity levels will cascade. Hiking rentals by enough to cover increasing insurance costs will make them unaffordable.
Now, what do investors typically do when the returns on a particular asset class begin to decline?
They move on to another one.
The table below shows the capital appreciation, cash yield and combined yield of residential real estate in select parts of the world.
These figures are what you can expect to see annually in the most lucrative markets in these places:
(I’ve cherry-picked the best markets, but that’s deliberate. My goal is to prove there are places outside the U.S. where investing in residential housing can protect you from the decline in property values due to increasing natural disasters, rising insurance costs and internal migration in the U.S.)
The S&P CoreLogic Case-Shiller U.S. National Home Price Index increased just under 4% during 2024.
In the same year, the average gross rental yield for three-bedroom home was about 7.5%.
That means that the average combined yield in the U.S. is about 11.5%.
That is also below the lowest figure for all the countries and regions I included in my table above.
And remember, my thesis is that the U.S. figures are going to fall over time because of the impact of natural disasters on the insurance market and the consequent migration away from disaster-prone areas.
Together, the figures suggest that selling U.S. residential real estate and reinvesting the profits in foreign residential markets is a sound investment decision right now.
I believe it’s going to become even more attractive over time.
And if you’d like to hear directly from me on this topic, you can join an elite group of like-minded investors next week to do just that.
P.S. This is just one solution to what’s going on right now in the U.S. There are many more that I’ll be sharing on Tuesday, May 20, at 2 p.m. Eastern. I urge you to come to this Emergency Wealth Conclave to hear about them all.
