Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I searched threads authored over the last couple of months and could only find one very short one addressing what seems to be a very significant issue.
My wife and I are renting in Miami and we were about to make an offer on an approx. $1m 3800sq/ft home in a 'high risk' designated flood zone near the ocean and the flood insurance is $55,000/YR!!!
That's just flood mind you, that's not counting homeowner's and wind, or the $20k/yr in property taxes. Add to that a reasonable amount of maintenance costs and you're at almost $100K/yr to live in $1mil home. (We of course decided to pass on this house.)
All of this because FEMA subsidies expired as of Oct. 1st 2013. If you're an existing resident they can only go up a certain percentage a year until full price but if it's a new purchase, or a second home, it kicks in immediately. And keep in mind that for the vast majority of home buyers, they can't self insure cause their mortgage company requires them to have flood ins.
This isn't a 'rich people problem' only for folks who can afford expensive homes on or near the water. Flood zones are everywhere, all over country, inland and on the coast, including many in middle and/or low income neighborhoods who's residents are going to either get insured out of their homes or will never be able to sell their homes to anyone with a mortgage, because flood ins. rates are about to rise as much as 1000%!
All of this is public yet somehow there isn't a homeowner's revolt going on. The federal government can barely agree to spend what they owe already so the likelihood of them reversing this is next to zero. Does the SC gov. have appetite to create a state subsidized insurance pool for flood? Because private companies don't seem to want to get involved at all, and even if they did there's no guarantee they'd be cheaper than FEMA.
So now what? Dead zones in high risk zones where only the super rich can afford to buy in cash and self insure? Whilst everything in X zones doubles in price as people flee their flood rates?
And this $55k/yr quote I got today ... on a $1m home it is based on the premise that a major flood that will destroy the entire insured value of the home will occur once in 20yrs, not even once over a hypothetical 30yr mortgage. So how exactly does that compute?
Every realtor I have spoken to locally either doesn't want to talk about it too loudly, doesn't want to talk about it at all, or is under the impression that something will be done about it by someone cause it's unthinkable if they don't. Yet here we are, and I expect that as existing homeowners get their new yearly bill, and as closing after closing starts falling through once the flood quote comes in, eventually critical mass will be achieved and something might be done about it.
So because of all of this, we are now reconsidering Charleston/Mt Pleasant as the place to make our home. But as I look at the available flood maps, basically most of Charleston and half of Mt Pleasant exists in designated high risk zones. So I'm wondering if we are going to be faced with the same issue when we look at homes here?
Does the fact that many homes are elevated on stilts change the elevation certificate and somehow make a home in a high risk zone equivalent to insure as a home built on foundations on an X designated zone?
Of course I will contact an insurance agent soon to try to get some clear cut answers to these questions ... but for now I am wondering how everyone is planning to cope with what will be either significant yearly increases in flood insurance premiums, or how you are dealing with it when you are trying to buy or sell a house and the mortgage company is forcing you to purchase insanely expensive flood coverage?
I just took a class to help understand the recent flood changes. One thing to be aware of is that the flood maps will change again in 2014 (at least in Charleston County). A property that is in a B zone now might be in an A zone next year. One with a base flood elevation (bfe) of say, 8' now might find itself in a bfe 10' next year. Even the insurance agents can't say what's going to happen 100%.
That said, a GOOD insurance agent is your best bet to understanding what the likelihoods are.
For the most part everyone's flood insurance is going to go up. On owner occupied homes the increases will mostly be capped so that the total rise will take place over the course of some years.
$55k is pretty darned high by any measure. FEMA only insures residential structures up to $250k. Was your $55k quote also including "excess coverage"? The FEMA rates should be the same across the board but excess coverage is from the private sector and it would be worth shopping around.
Here's the quote (I redacted the homeowner's name):
And yes, this homeowner will not be hit immediately with a $55k bill as I would if I purchased the home, but it will escalate to that over the next few years.
--------------------------------------------
In regards to Charleston ...
Would it be fair to say that the X designated zones are the one with the least flood insurance cost per square foot and that they are the ones least likely to get affected by the remapping?
And (if you know), what impact, if any, do the stilts have on one's flood insurance premium?
For example if the house is in a VE zone but is jacked up 15ft, does that put it in the same insurance risk as a house which resides on a natural 15ft elevation?
The people who are going to see those exorbitant flood premiums going forward are the pre-firm and non-conforming elevations, i.e. homes built prior to 1971 and whose policies have been grandfathered in. On resale, the clock is reset and I've seen flood policies on prefirm $200k homes coming back at $25k/yr whereas before they were under $2k/yr.
More and more properties will be non-conforming with the new flood plains in 2014, most likely. That coupled with the older homes losing their pre-firm grandfathered status on resale now, and most flood premiums will be going up. Though with regards to the amounts, the 5 figure premiums might still be reserved to those homes built prior to 1971, on a slab, in a flood plain.
In short, if you are interested in any home in the tri-county area, you MUST do two things. (1)Check with an insurance carrier and get a firm insurance quote on that exact home before even thinking about writing an offer. And (2) also make your offer/contract contingent upon finding an affordable home owner's/flood insurance policy. Going forward without those two these days in a real estate transaction (even using the due diligence clause of the contract) still isn't advisable.
That is a non-conforming home. It's in a VE zone, and it's on a slab. It's built 9 feet below the base flood elevation. If it were elevated (call a contractor and find out the cost of putting it on stilts) it would get a conforming premium and a much more affordable yearly payment.
Quote:
Originally Posted by soulsea
Here's the quote (I redacted the homeowner's name):
And yes, this homeowner will not be hit immediately with a $55k bill as I would if I purchased the home, but it will escalate to that over the next few years.
--------------------------------------------
In regards to Charleston ...
Would it be fair to say that the X designated zones are the one with the least flood insurance cost per square foot and that they are the ones least likely to get affected by the remapping?
And (if you know), what impact, if any, do the stilts have on one's flood insurance premium?
For example if the house is in a VE zone but is jacked up 15ft, does that put it in the same insurance risk as a house which resides on a natural 15ft elevation?
I asked my mortgage agent a few weeks ago what the ranges were for flood insurance and she did mention that those on Sullivan's or IOP can reach upwards of $50k so your estimate didn't strike me as unusual.
The people who are going to see those exorbitant flood premiums going forward are the pre-firm and non-conforming elevations, i.e. homes built prior to 1971 and whose policies have been grandfathered in. On resale, the clock is reset and I've seen flood policies on prefirm $200k homes coming back at $25k/yr whereas before they were under $2k/yr.
Doesn't this have catastrophic consequences for the downtown/historic Charleston market? Obviously most if not all of the homes there pre-date 1971. So every time someone goes to buy a property with a mortgage, the flood quote is going to come back at similar premium percentage increases as the one I am facing in the house in Florida no?
Quote:
More and more properties will be non-conforming with the new flood plains in 2014, most likely. That coupled with the older homes losing their pre-firm grandfathered status on resale now, and most flood premiums will be going up. Though with regards to the amounts, the 5 figure premiums might still be reserved to those homes built prior to 1971, on a slab, in a flood plain.
Does anyone have a sense of how aggressive or conservative the new maps will be in 2014? Meaning, are they being adjusted to compensate for increased flood risk or for the fact that many areas currently in designated high risk zones have historically proven not to be ... or both?
Quote:
In short, if you are interested in any home in the tri-county area, you MUST do two things. (1)Check with an insurance carrier and get a firm insurance quote on that exact home before even thinking about writing an offer. And (2) also make your offer/contract contingent upon finding an affordable home owner's/flood insurance policy. Going forward without those two these days in a real estate transaction (even using the due diligence clause of the contract) still isn't advisable.
That is indeed the plan ... I am just trying to inform myself as much as possible through this thread so I don't show up ignorant at the conversation with the agent and I know what questions to ask. I'm also trying to establish if there are entire neighborhoods of Charleston and MP that I should avoid altogether because of the FIRA of 2102. For example, what of Isle of Palms, Sullivan's Island, and Kiawah Island, what's going to happen there?
Btw, I'm very appreciative of all the help and information from everyone.
That is a non-conforming home. It's in a VE zone, and it's on a slab. It's built 9 feet below the base flood elevation. If it were elevated (call a contractor and find out the cost of putting it on stilts) it would get a conforming premium and a much more affordable yearly payment.
Okay, even though $55K/yr doesn't compute in my noggin as a reasonable rate for that flood risk, and seems more punitive than fair, especially since the house has never flooded since it was built, I'll still say fair enough in my case.
But that's the situation an incredible number of homeowners (tens of millions including the major coastal metropolitan areas with older homes) are going to find themselves in across the US, along most of the coasts, rivers, lowlands, lakes, etc. Most of whom don't own million dollar homes and can neither afford the flood insurance nor raising their home, or would find it more cost effective to plow down their home and rebuild it rather than raising it, if they're even allowed to do it at all.
Am I overreacting ... am I really the only one who sees this a impending major setback, stalling what is a delicate housing recovery to begin with?
So now what? Dead zones in high risk zones where only the super rich can afford to buy in cash and self insure?
Home Prices will adjust to accomodate the new market reality, now that the u.s. taxpayer isn't subsidizing the cost of living in a flood zone.
Quote:
Does the fact that many homes are elevated on stilts change the elevation certificate and somehow make a home in a high risk zone equivalent to insure as a home built on foundations on an X designated zone?
don't quote me on this, but as i understand it, having a raised foundation will give you a dramatically lower flood premium than ground-level.
Okay, even though $55K/yr doesn't compute in my noggin as a reasonable rate for that flood risk, and seems more punitive than fair, especially since the house has never flooded since it was built, I'll still say fair enough in my case.
But that's the situation an incredible number of homeowners (tens of millions including the major coastal metropolitan areas with older homes) are going to find themselves in across the US, along most of the coasts, rivers, lowlands, lakes, etc. Most of whom don't own million dollar homes and can neither afford the flood insurance nor raising their home, or would find it more cost effective to plow down their home and rebuild it rather than raising it, if they're even allowed to do it at all.
Am I overreacting ... am I really the only one who sees this a impending major setback, stalling what is a delicate housing recovery to begin with?
You are not overreacting. Many are simply unaware. Whole neighborhoods are going to be "unsellable" for those pre-firm and non-conforming issues outlined above unless the Fed steps in and does something about it. NAR is already pushing for it and I know I've gotten a few campaign emails from congressmen and women at work in DC on it already. In the meantime, X flood plain properties are getting much more popular, yes.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
