A similar argument works if insurance is just based on reconstruction cost, but construction costs inflate faster than incomes.
If properties become unaffordable, then to restore equilibrium, property prices must fall, incomes must rise, or lower-income residents will sell to higher-income purchasers. If there are few higher-income purchasers, property prices will fall.
Property taxes could be cut, or decoupled from property values (e.g. poll tax), but that never happens.
If the risk really is high, there is no practical insurance available, and all purchasers are rational, then the price may go to zero.
An example of an irrational purchaser would be one who assigned high status to a beach house, even in the face of threats from coastal erosion, hurricane floods or tsunamis.