NEXT REAL ESTATE CRASH Pinellas home values drop by 50% overnight.

Real Estate Broker/Owner with South Beaches Real Estate Professionals BK 652174

That is the headline you will see in all the newspapers by this time next year.

No, I am not joking or exaggerating.

If the new flood insurance bill is implemented, it will devastate all American coastal towns, with Pinellas County being the hardest hit in all of the US.

If I gave you all the little details this post would be 20 pages long (I have included links for detailed information). 

The short of it is:

Flood insurance rates will go up dramatically for properties built before 1975 in an A and V flood zone. Please do not think you are off the hook if your home was built after 1975, there will still be increases. 

Here are some examples I got from Holehouse insurance company in Pinellas County. 


If you sell your home, here is what the new owner is looking at.

1960 home with a dwelling value of $148,000 purchased on 3/15/2013. Current flood insurance is$1,072. The house is 7 feet below current base flood elevation meaning an estimated renewal of $22,400.

1969 home with a dwelling coverage of $250,000 purchased on 12/31/2013. Current flood insurance rate is $1,980. The house is 4 feet below current base flood elevation meaning and estimated renewal of $8,850

1956 home with a dwelling value of $250,000 purchased on 7/31/2013.  current flood insurance rate is $1980. The house is 8 feet below base flood  meaning an estimated renewal of $29,100


If you stay in your home

an existing homeowner will pay a 25% a year increase until they reach their elevation certificate rate. Using two examples of Per Firm (built before 1975) homes with current flood policies in an A flood zone and a V flood zone

A flood zone

current rate is                  $2,000

after 4 years is it             $4,883

after 8 years it is             $11,921


V flood zone           

Current rate is               $4,000

in 4 years it is                $9,765

in 8 years it is                $23,842


Commercial properties are also affected. If you buy one you will have to pay the highest rate immediately. If you own one already you will see the 25% yearly increase.

Condo associations will see a 25% increase yearly on their flood insurance rates.


Our tiny little Pinellas County has at least 30,000 dwelling that are affected if not 50,000. here is a link to the US FEMA map.,33.1708,-76.9399,43.9898


Who in their right mind would ever buy or could afford to buy a home for $150,000 with a yearly flood insurance premium of $22,000?

This new bill will make so many homes absolutely unaffordable for people who currently own it and totally unsellable.


So what is going to happen?


This will be a freefall in home values. Think about it, once people get the renewal rate sometime during the next 12 month, they will realize that they can't sell their home anymore and can't afford to keep it either. They will stop making payments on their mortgage, the market will be flooded with Short Sales etc. Investors will come in and pick up these properties for pennies on the dollar (land value minus cost for tearing down the existing structure). 

This dramatic decrease in property values will lead to a huge problem not only for homeowners in Pinellas County (and all coastal areas in the Country) but for the counties themselves. Property tax income will probably be cut in half and counties will have to cut back drastically on the services they offer.

I would not be surprised if we see situations like in Boston and Detroit where Bankruptcy is the only option left.

Keep in mind, commercial properties are also affected by this new bill. Hotels, restaurants, shops , rental apartments etc. will see a huge increase in their policy premiums and they will have no other choice than to increase all their prices to make up for that and maybe cut down on their employees. The cost of living will go up a lot, the unemployment rate will go up, tourist will find other destinations that are cheaper etc.

I can go on forever, but I think you get the picture. 

To top it all of, FEMA is doing this because they need money. This time they will not get it from Florida. A lot of our homes down here are "mortgage free" and a lot of the homeowners that I have talked to will simply cancel their flood insurance and take a chance. So, our coastal counties will suffer a lot and people will lose their homes for NOTHING. 


For the last 90 years (since we had the last hurricane hit our area) everybody in Pinellas County thought that the next big flood could devastate the area. Isn't it ironic that now the next big flood insurance increase will devastate the county ..................

Below is the link to a petition, asking the government to rethink the issue before it is too late

PLEASE sign it and spread the word !!!  (find a petition for your county)

This new flood insurance bill will not just affect waterfront properties, it will affect everybody living in a coastal area or near rivers.

PS. I hear people say that it is "only fair" that people in Florida with their "tropical lifestyle" pay more. Please keep in mind that for all these years Florida has been FEMA's cash cow and has been paying far more than anybody else. Florida, only gets back 26 cents on each dollar we have been paying into the flood insurance program.

Map of claims paid by FEMA

Detailed info about the new flood insurance bill  from Holehouse insurance

Fema website Biggert - Waters Bill

Link to Chamber of commerce site.

Like I said before, I think we are looking at the

NEXT REAL ESTATE CRASH  Pinellas County  home values drop by 50% overnight.


UPDATE  !!!!!

please click on this post, it might just be a way around this new flood insurance bill


Comments (84)

Christa Ross
RE/MAX Select Realty - REALTOR and Green Homes Specialist - Pittsburgh, PA
Helping you buy and sell Pittsburgh's Best Homes

I certainly feel for the people that are going to be affected by this increase, but I have to comment on the fact that the reason this is happening is because the likely hood of these homes being flooded is great, you even mentioned yourself that "everyone thought the next big flood could wipe out Pinellas County".

Is the insurance company and/or the government supposed to just stand by and keep rates low while ignoring the very real risk that at some point these homes will probably be destroyed by flooding, and someone other than those that live in the home will have to pick up the tab that goes up into the Billions of dollars of damage? The people that live in these coastal towns know better than anyone about the risks of flooding, and we all saw an example of what can happen last year with Sandy.

I don't think it is wise to allow people to continue to live in a flood prone area without the protection of insurance, expensive as it may be. My biggest concern is how the drop in home values will affect the individual homeowners. It could be devastating to them and I hope that an option is presented to soften the impact.

As a society we can not continue to live in areas that Mother Nature doesn't intend us to be in and be surprised when problems arise. We build on the coastline and are upset when the hurricane wipes out the community, we build in the desert and are amazed when there is a water shortage, we build on hillsides and are shocked when the house slides down the hill. All these may be wonderful places to live, but there is a price to pay.

Sep 05, 2013 09:51 PM
Anne Hensel
South Beaches Real Estate Professionals - Saint Petersburg, FL
Realtor - Broker - St. Pete Beach, Treasure Island

Carol, YES you are so right. This would balance the situation and Sandy is a good example. In today's world with all our natural disasters pretty much everybody is at risk of something. Make the premium a percentage of the home value and be done.

Sep 05, 2013 09:55 PM
Ed Silva
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

As Carol #64 just pointed out, Storm Sandy did a lot of damage up here to towns that would never be considered in flood zones, and FEMA is paying out billions, The recovery wants to come from somewhere but one area should not have to support the Nation

Sep 05, 2013 10:13 PM
Kathy Sheehan
Bay Equity, LLC 770-634-4021 - Atlanta, GA
Senior Loan Officer
Good morning! Thanks for the info as I wasn't aware of the proposed premium increases. This is going to have a huge impact on the market without question.
Sep 05, 2013 10:25 PM
Anne Hensel
South Beaches Real Estate Professionals - Saint Petersburg, FL
Realtor - Broker - St. Pete Beach, Treasure Island

Christa, thank you for your comment. You are making some good points. Yes, everybody in our area that bought on or near the water knows that there might be a flood one of these days and we take that chance.

Flood insurance coverage is capped off at $250,000 so if you just paid one million for your home you are paying flood insurance but still take a $750,000 risk.

Look with Sandy and Katrina, it didn't really matter if you had flood insurance or not, FEMA spent the money on everybody not just insured people.

Rebuilding in a "risk" area, well I do not agree with this either but what are you going to do? Simply make this areas uninsurable for new construction. But then what, a natural disaster happens, we all watch it on TV and nobody steps in to help?

The idea on insurance is that everybody pays into one pot and people how need the money get helped. Some people will pay more into the pot and other less but, some will get more out of it, others less and that is ok unless you come up with insane rates like in the new insurance bill.

Like you said, hopefully someone will come up with a better approach because this one will not work !

half of our home owners will just cancel their insurance and the other half will do a Short Sale.



Sep 05, 2013 10:30 PM
Anne Hensel
South Beaches Real Estate Professionals - Saint Petersburg, FL
Realtor - Broker - St. Pete Beach, Treasure Island


Sep 05, 2013 10:31 PM
Ed & Tracy Oliva
West USA Realty - Arizona - Fountain Hills, AZ
The Oliva Team Arizona Agents

Good Morning:   I hope your Info is wrong!!!   This is crazy,   keep up the good work and good luck with your sales,   E

Sep 05, 2013 10:48 PM
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Anne, I believe FEMA has been subsidizing the flood insurance program all these years and can no longer carry the load with the sequestration cuts. Unfortunately, the homeowners will now have to carry the load.

Sep 05, 2013 10:58 PM
Tanya Van Blake-Coleman
Van Blake-Coleman Realty, St. Thomas/ - St Thomas, VI
Improving the Quality of Your Life

Wow, this would be devistating. I believe flood insurance is a federal issue, it sounds like this will effect more than just your area, but accross the nation, anywhere that has flooding issues.

Sep 05, 2013 11:04 PM
Anne Hensel
South Beaches Real Estate Professionals - Saint Petersburg, FL
Realtor - Broker - St. Pete Beach, Treasure Island

Tanya, you are right but I do not know how it will affect the other areas. According to FEMA's own statistics Pinellas County will by far see the worst impact in the nation

Sep 05, 2013 11:18 PM
Anne Hensel
South Beaches Real Estate Professionals - Saint Petersburg, FL
Realtor - Broker - St. Pete Beach, Treasure Island

Michael, thanks for your comment. My problem is that homeowners at the time of buying were told that the rates are "grandfather in"  and people trusted that. Also, Florida is ALREADY paying one third of FEMA revenue und old rates. Looks like we are going to pick up pretty much everybodys part under the new Biggert - Waters Bill    


Sep 05, 2013 11:21 PM
Suzanne Taylor
Ultima Real Estate - Corpus Christi - Corpus Christi, TX
Home Sales In Corpus Christi, TX

Our problem here in Corpus Christi is the windstorm insurance.  The insurance industry is nailing the counties along the coast.  Everywhere else in the state the windstorm is included in their homeowner's policy, not here, we have to purchase a separate policy which averages four times the amount of our homeowner's policy.  You have my sympathy.

Sep 06, 2013 12:05 AM
Bill and MaryAnn Wagner
Wagner Real Estate Group - Ocean City, NJ
Jersey Shore and South Jersey Real Estate
Hi Anne, I think it is great that you chosen to bring to light the real affects of the Biggert-Waters Bill. Let me preface my comments by telling you that I grew up living on the water at the Jersey Shore and have personally lived through storms, hurricanes and the flooding and destruction that results in these areas. Many of my family members on Long Beach Island were Sandy victims and their homes experienced damage. Fortunately, most of them presently live in newer homes designed in excess of the flood elevation requirements, so their flood claims and resultant damage were minimal. The majority of their insurance claims were paid by their homeowners policy for, wind and rain damage. They did not always live in homes that were elevated but what experience and common sense taught our family over the 60 years we've inhabited the Jersey Shore is that it was not a question of if, only a question of when. When I was growing up there was no such thing as flood insurance. The NFIP did not come into existence until 1968. So when we were flooded, my parents and other family members sucked it up, wrote the checks and made the repairs. That was the price you paid to live at the shore. I believe it is time to deal with reality. It's time to eliminate the false sense of security that the NFIP has provided for those that were granted the benefit of pre-firm, subsidized rates. The biggest fault that I find with the NFIP is that they haven't adjusted the elevation requirements much sooner. The program is underwater by 30 billion dollars and it is foolish to think that the situation will not worsen. Prior to entering the real estate industry 35 years ago, and for many years afterward I owned a construction company and built many homes on the Island. I built them based on my personal knowledge and experience. They were built to standards well above code and elevation requirements. The result is that everyone of them still fall above the new base elevation requirements and those owners will not be subject to huge increases in premiums. A very large number of owners in our shore area who were severely affected are now investing to elevate their homes to exceed the newly proposed elevation requirements. I am personally going to list a home today that is below the new elevation requirement. My advice to the homeowners will be that they pay to elevate their home by four blocks to exceed to new requirement if they want to maximize their net return. Rather than trying to fight the bill or have it rescinded, I think we should be encouraging our local, state and federal governments to provide more funding and financing programs to assist owners in flood mitigation. It's just common sense. The same sense I was using 40 years ago.
Sep 06, 2013 12:56 AM
Graziella Bruner
NCS Premier Real Estate - Detroit, MI
Associate Broker - Serving Wayne & Oakland County

WOW, I can't see people making those types of payments, more than likely, they will just go with out the insurance, You will need a second full time job just to pay the insurance.  How crazy is that?  It's going to be tough trying to sell or buy in that community.

Thanks for sharing!

Sep 06, 2013 01:19 AM
Dwight Puntigan
DRP Realty, LLC - Saint Peters, MO
Dwight Puntigan

We have given Washington too much power.  Most problems are local and should be handled as local as possible:  neighborhood, city, county, and state.  For years zoning has been a tool to raise the tax base with a short term vision.  It has a way of catching up to our short sighted mistakes.  Our rivers rise and fall every year and the Army Corps of Engineers has become a political tool.  The community must show responsibility.  Whether it is a dike, raising the elevation of the home, or a buy out.

Sep 06, 2013 01:36 AM
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of the Manchester NH's area Leading Agents

That is crazy!!! I hope it does not go that high along our coast

Sep 06, 2013 02:54 AM
Bryan Robertson
Los Altos, CA

I can understand why insurance companies would want to raise rates after so many destructive storms but those costs are ridiculous.  Give the value of the homes, I'll bet there are people who couldn't afford the premiums, let alone trying to sell.

Sep 06, 2013 04:12 AM
Fernando Herboso - Associate Broker MD, & VA
Maxus Realty Group of Samson Properties - Clarksburg, MD
301-246-0001 Serving Maryland, DC and Northern VA

They may not be raising rates they maybe just forcing people out. . so they wil not be forced in serving them. .

Sep 06, 2013 04:33 AM
Anne Hensel
South Beaches Real Estate Professionals - Saint Petersburg, FL
Realtor - Broker - St. Pete Beach, Treasure Island

Bill thank you so much for your comment and you are making a few very good points. The 30 billion dollar problem did not happen overnight, they accumulated this over the last 45 years. Flood maps and elevation requirements and rates and building codes should have been updated every few years and we would not be in this mess today. Something needs to be done but the way they are going about it is ALL WRONG.

Most of the affected homes in our area are built slab on grade. I am still trying to find out if you could raise them and how much it is going to be. What I have heard so far is that it either can't be done or you are looking at a 6 figure bill. So, it looks like this is not an option for us that makes any financial sense.

Sep 06, 2013 10:50 PM
Anne Hensel
South Beaches Real Estate Professionals - Saint Petersburg, FL
Realtor - Broker - St. Pete Beach, Treasure Island


Hi guys

please read this post, it might be a way to get around this stupid new flood insurance bill

Sep 21, 2013 04:14 AM