FEMA ….FIRM ( Flood Insurance Rate Mapping )
Last November of 2022, shortly after Hurricane Ian hit us FEMA adjusted its Flood Rate Mapping system. Flood zone hazard areas were drastically increased in to areas that were not previously located in Flood Zones. This was especially difficult for existing property owners that had mortgages on their properties….now their Lenders require them to have Flood insurance…..plus…..it changed the status of many existing listings ( including some of ours ) that were placed noting Flood Zone X and had to be modified to show those properties are now in a Flood Zone. FEMA also changed the elevation categories withing the area of their Flood Hazard Zones to a much higher level…for example…..The construction of new homes along our water front properties require more detailed engineering with homes placed on concrete pier sets in order to be in compliance with new regulations and building codes. This of course adds much to the costs of water front construction and to Flood Insurance premiums to all the existing homes that are well below the new FEMA flood elevations
Then…..there is the dreaded FEMA 50 % Rule that applies to renovations made on any existing homes that have floor elevations below the new levels….which include almost every home build prior to 1985. This rule prohibits drastically the scope of improvements you are allowed to do to these existing homes.
Home Owners Insurance Crisis in the State of Florida
Since Ian many insurance underwriters have paid enormous claims and had to fight much litigation. Home Owners insurance premiums have doubled, sometimes tripled in costs. Fifteen Insurers have placed moratoriums on writing new policies….at least half a dozen large insurers have completely pulled out of Florida and another seven became insolvent….plus the insurance underwriters have placed much higher restrictions on the homes they do insure to be in compliance with stringent inspection reports . Bringing a home in to insurance compliance can cost thousands of dollars that either the Buyer or Seller will have to comply with.
Increased Interest Rates
As you all are aware the Feds keep increasing interest rates in an attempt to curb high inflation. Interest rates on mortgages have more than doubled in the last 2 years. Add this with the high costs of insurance and its clear to see it can be difficult to get a loan approval for the average middle class that rely on financing a home.
This is NOT however, a “ Doom & Gloom “ for the real estate market in Florida….consider it knowledge with some possible corrections that will come. We remain optimistic on the Florida market…demand is still strong with approx.. 900 people a day taking up residence in Florida. The insurance crisis will end, and we will all adjust to increased premiums just as we adjusted to increased fuel prices at the gas pumps.
Construction design methods and technology in building new homes in flood zones will give us added protection as well as lower insurance premiums…..after all…..Florida has the best weather in the country and still remains one of the most desired states in which to reside…We at Value Pro look forward to a bright future in the real estate market and providing our clientele with real and accurate information.
The author of this Blog, our Managing Partner, Marty Untch Jr., aside from being a Real Estate professional for 40 years is also a Florida licensed certified Building Contractor and a Florida licensed Inspector. Our building company has constructed many new homes over the years and mostly in flood zone areas. We have also reconstructed many food damaged homes and had to deal with the FEMA 50 % Rule first hand. We have also performed hundreds of insurance inspections on homes for insurability