With homes for sale in Plymouth and on Cape Cod or buyers for whom to find homes, I try to be precise and complete in my work product and knowledgeable of current market changes affecting clients. It's my job to provide accurate advice.
As most of us now know the Federal Emergency Management Agency, FEMA has been in the process of re-drawing their flood maps which have not been updated for 20 years or more. As a result the areas affected by flood waters are expanding and thus flood insurance will be required for more homeowners and increased cost for those already affected.
I was recently part of a meeting on Cape that was attended by other Realtors and several federal and state employees of FEMA, Conservation and Planning. Some of these panel members were heavy hitters and included a representative from Washington D.C. My prior blog outlined the issues and this is an update following this meeting.
After all the presentations and questions it comes down to the following at the present time:
1) The National Flood Insurance Program, NFIP, passed by Congress is the only game in town. According to insurance industry leaders there is no market for private companies to write flood insurance. They don't want the risk and/or can't make a profit on what they would need to charge for rates. If Congess decides to defund this program there is no alternative for many homeowners. In MA there is Mass Fair Plan.
2) All the new FEMA maps are preliminary and may change until early in 2014. So even looking at the maps today is no guarantee your property will not be in a flood zone area when finalized.
3) NFIP is not sustainable as it is losing money subsidizing flood damaged areas. The cost of insuring properties has to be pushed out to those who buy and build on the coast in areas designated as prone to flooding.
4) Flood insurance costs as we know it will be going up yearly until premiums can cover the actual cost of insuring a home in a flood zone area. "Elevation Certificates" may be a seller/buyer requirement to real estate transactions in the future. Costs for these surveys will likely be $200-$1,000 depending on level of difficulty and time needed to survey. But they will be the definitive method to determine whether or not property is in the flood zone. Once in a flood zone your in it. Homeowners may be able to modify their homes to lower their costs but they will still be in the flood zone.
5) All agencies, Congress and local towns are trying to find a way to ease into this inevitability and not destroy homwowners or forcing some to default and keep the real estate market recovery intact.
6) There will be several types of policies and some sellers may be able to transfer their current policies to new buyers. This may be short term as Flood Insurance Rate Maps, FIRM and Elevation Certificates will override grandfathered properties. Everyone hopes there are sane approaches to this per #5.
No doubt this dialog will continue into 2014. The best advice is to point buyers and sellers to the appropriate agency and to local insurance agencies who job it is to stay current.
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