Market Conditions in 32541>Question Details

Michael Byrd, Real Estate Pro in Destin, FL

How will the recent federal flood insurance changes effect waterfront property prices?

Asked by Michael Byrd, Destin, FL Mon Nov 4, 2013

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5
Flood Insurance will cost more, that is a given. the cost of waterfront living will increase. The Federal Government will delay making any decisions because that is the way they seem to operate,
0 votes Thank Flag Link Tue Nov 5, 2013
If you want to sing the song, you have to pay the band.
0 votes Thank Flag Link Tue Nov 5, 2013
Buying a waterfront or ANY home within the flood zone comes with the caveat, "in the next 10 years your insurpance premium can be as much as 250% of your mortgage payment. (Recent quotes exceeded the mortgage payment.) So, in less than five years of these increased rates, one will have paid more for the premium than for the house.
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The new buyer must be prepared to be self insured, this means CASH BUYER ONLY!
What bank would grant a mortgage on a property where the near term (5 yr) costs could quadrauple and force the buyer into foreclosure.
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A buyer or seller could consider the appr $50,000 required to elevate the house, but even that does not assure the flood insurance premiums will be manageable.
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The recent, and apparently only response the dolts in DC know, was to kick the can down the road, thereby extending the uncertainty for anohter five years before they implement a step phase out of the entire subsidy. At that time the insurance companies will applied premiums based on real actuarials from the Federal Flood Insurance program. Many states, such as Florida, hopefully, will choose to be self-insured.
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Those making a living exclusively through waterfront sales is in for stormy seas ahead. There are buyers who can pay cash and wll forego the insurance. These buyers know the seller is in a real hard situation. The owner may see greater benefit in a more strategic solution.
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It willl be comical, for those of us living high and dry, to see the author of the Bigger-Waters Act back pedal. Waters is already dodging and weaving.
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I have a First Look, high & dry, with easy access to the Gulf.
Another First Look, with a great big water view and direct deep water frontage to the Gulf, for those who are looking to sieze the moment.

Best regards,
Annette Lawrence, Broker/Associate
Remax Realtec Group
Palm Harbor, Fl
727.420.4041
Move to the Front of the Line (http://FirstLookHomes.us)
0 votes Thank Flag Link Tue Nov 5, 2013
This is a wonderful area for discussion. Right now they have been able to hold off the increases for at least next year. However, flood insurance is supposed to go up at least 10 times where it is now. While that has been put on hold for the time being, I suspect it will still go up that much but maybe just not the full 10x at once. It may be slowly rolled out instead and owners may be facing increases say at a 3% rate until the total is reached over a number of years. What will happen is that the homes at the water's edge will then be less desirable to own due to the costs of flood insurance and this will cause them to go down in value rather than up in my opinion.

Although I do not have the crystal ball to predict this situation, it is my personal opinion that this is what will happen. I would be careful as to owning any waterfront property as an investment. If money is not an object then the risks for the very wealthy may still be willing to take the risks associated with flooding and be able to pay for the costs of such as well.

Warmly yours,
Kelly Klein,
Lifeguard Real Estate, Inc.
850-420-2480
Kelly@KellyKleinSoldMine.com
http://www.KellyKleinSoldMine.com
0 votes Thank Flag Link Tue Nov 5, 2013
Hello Michael,

as of now we still don't know--the maps have not yet been completed as far as I know, and we don't yet know the effect--even insurance agents I have asked still don't have the answers to this question. It could lower the prices, as it might very well diminish the buyer pool as people can't get affordable insurance-- it will also have major impact on lender availability.

Myke Triebold
850-305-6256
MykeSaysSold@aol.com
0 votes Thank Flag Link Mon Nov 4, 2013
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