Homeowners are getting hit with flood insurance cost increases of up to 18 percent a year, and they face uncertainty as a
Sept. 30 deadline approaches for Congress to extend the National Flood Insurance Program or allow it to expire.
The subsidies — which are now being phased out — apply primarily to homes built before their communities adopted
flood maps, and to homes that were added to high-risk zones when maps were updated.
For low-lying homes in waterfront areas that do not receive subsidies, annual premiums of $1,800 to $7,000 are
common, but premiums can exceed $25,000, local insurance brokers said. Most mortgage lenders require flood
insurance for homes in areas at high risk of storm damage.
The cost increases are causing “sticker shock” for families, said Michael Raab, who works for Nassau County.
“We are finally paying for the risk of our homes, and it is a devastating addition to a family’s budget,” Raab said. “A lot of
families live month to month. . . . There are people that are honestly going to have to rethink living in their homes.”
Home prices, values can take hit
The high price of owning a low-lying home also could cause some buyers to think twice, said Jonathan Miller, chief
executive of Manhattan-based appraisal company Miller Samuel.
“If there’s a higher cost associated with homeownership, that tempers home price growth,” Miller said.
A $500 increase in flood insurance premiums causes a $10,000 decrease in home value, according to a report by
Manhattan-based Legal Services NYC.
A typical house with high flood premiums can sit on the market for months, said Nick Sakalis, a real estate agent with
Coldwell Banker Residential Brokerage in Syosset. “What happens when the seller needs to sell is, they start to drop the
price almost every month until they can find a buyer,” he said.
Mortgage lenders take flood premiums into consideration, too.
“Higher insurance premiums will certainly impact a borrower’s qualifying debt-to-income ratio, effectively reducing
their borrowing power in some cases,” said Michael Bocelli, a division manager at Quontic Bank in Melville. “It’s
definitely something for home buyers to consider.”
Read the full story here http://www.newsday.com/business/li-flood-insurance-premiums-rising-up-to-18-a-year-1.13174031
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