When the federal government implements changes to the national flood insurance program in early October, Anna Maria Island will be the hardest hit in the country, according to a New York Times report.
More residences there than in any other zip code in America will see rate hikes of more than $ 1,200 per year on Barrier Island at the southern tip of Tampa Bay. This number will only increase in the years to come, according to the New York Time analysis.
Changes to the program revolve around the way insurance premiums are calculated, moving from reliance on 100-year flood-prone maps to a calculation that will for the first time take into account the size of a house and the distance from potential sources of flooding.
Federal officials say the goal is fairness – and also getting homeowners to understand the extent of the risk they face, and perhaps move to safer land, thus reducing the human and financial toll. disasters, reports The Times.
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Local real estate experts told the Herald-Tribune that the impacts on Anna Maria Island and other wealthy places are unlikely to be immediate or significant, as many owners of these barrier islands have the means to absorb the blow. financial.
But the impact can be felt much more in less affluent areas along places such as Phillippi Creek, the Myakka River and other places that could see spikes in federal flood insurance premiums starting to cost. dear to potential buyers.
Changes to the way federal insurance premiums are determined will take effect October 1 for all new policies, with existing policies affected in early April.
Jeff Nungesser, owner and agent of Iron City Insurance in Sarasota, said that before the federal program changes, the two most important factors when it comes to flood insurance premiums were flood zone maps. and the height of a residence above or below the baseline flood. elevation.
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The new premiums will be calculated taking into account 10 factors, the most important being the distance from a flood source and the types of flooding a property could experience, he said.
He said the cost of rebuilding a property and its square footage is now also factored in when determining premiums, which was not previously part of the calculation.
An insurance policy recently sold by Nungesser was for a house in Siesta Key that reportedly paid about $ 1,000 a year in flood insurance. If the homeowner had used the federal insurance program, that person would have had to pay $ 5,000 per year in flood insurance using the new method.
“I was able to find him a policy in the private market for $ 2,000 a year,” Nungesser said.
The most immediate impact will be on new flood insurance policies, he said, as the federal program is capped at rate hikes of 18% per year for existing policies.
The New York Times report notes that with annual increases of 18%, the new method of calculating flood insurance premiums could take up to 20 years to reach the true cost of the insurance premium. against flooding.
U.S. Representative Vern Buchanan signed a bipartisan letter to Speaker of the House Nancy Pelosi and Parliamentary Minority Leader Kevin McCarthy.
The letter signed by 53 U.S. officials urges delaying the implementation of changes to the federal flood insurance program.
Buchanan sent a written statement to the Herald-Tribune expressing “extreme concern” about the changes and their impact on the 1.7 million flood insurance policyholders in Florida.
President Joe Biden “should step in and immediately delay the implementation of this new pricing program,” he wrote. “Floridians need access to affordable flood insurance that allows them to better protect their families, homes and businesses – and to recover quickly from the next disaster. “
Potential impacts on the market
Shellie Young, a real estate agent specializing in Anna Maria Island properties for Premier Sotheby’s International Realty, said that even with a rate hike of $ 1,200, many people buying homes on the region’s barrier islands will not see this as a significant obstacle.
“It will not concern them,” she said. “Whatever it is.”
Most of the waterfront properties on Anna Maria Island are priced well over a million dollars. She said many of her buyers are more concerned about the potential impacts of tax increases than increases in flood insurance premiums.
For other areas, she said increasing the flood premium could start pushing down the price for potential buyers.
Alex Krumm, president of the Sarasota Realtors and Manatees Association and owner broker at NextHome Excellence, agreed this could become a problem for less affluent buyers and even affect property values in the area.
He said that every time the costs go up there will be an impact on the value. In this case, flood insurance, which is often required by banks issuing a mortgage, represents an increase in costs and will decrease demand.
“Your average Joe will feel the pinch a lot more than the affluent buyer,” he said.
According to FEMA data, the New York Times reported, of the program’s 3.4 million single-family homes nationwide, 2.4 million of those homes will see their rates increase by up to $ 120 in the first year. which is “similar to the usual annual increases under the current system.” “
“627,000 additional homes will see their costs drop,” the Times said.
But, added the Times, “331,000 single-family homes across the country will face a significant increase in costs. Over 230,000 households will see increases of $ 120 to $ 240 in the first year; and $ 360. For about 25,000 single-family homes, the costs will climb to between $ 360 and $ 1,200. “
The Times reported that “nearly half of those 25,000 households are in Florida, many of them along the high-risk barrier island chain that stretches from St. Petersburg south to at Fort Myers “, including high concentrations at Anna Maria, Siesta Key and Boca. Big.