Posted on 09/26/2013 12:55:01 PM PDT by Theoria
When Colin and Joyce Elston bought their Florida dream home in May, they were confident they could afford the three-bedroom, two-bathroom ranch with a pool and a backyard overlooking the Intracoastal Waterway.
Now they are not so sure.
The retirees said they had enough in savings and investments to pay the mortgage and the $1,482 yearly flood insurance on the home, which sits on palm tree-lined Paradise Boulevard on Treasure Island, a barrier island in the Gulf of Mexico.
But within two months of moving in, they received a stunning surprise: Due to a recently passed federal law, their flood insurance was slated to jump from less than $1,500 to $12,000 a year.
The rate hikes, which go into effect on Oct. 1, are due to the Biggert-Waters Flood Insurance Reform Act of 2012. The measure was passed to keep the National Flood Insurance Program solvent after an onslaught of claims from Hurricane Katrina in 2005. Essentially, what it does is remove federal subsidies from properties in flood zones.
"Everyone's going to pay more for flood insurance," said Lee Gorodetsky, an insurance agent in Fort Lauderdale. "It's just a question of how much. And we've seen so many floods now: Colorado, last year, hurricane Sandy, before that, other parts of the country. And it's obvious the ... program is bankrupt."
The Elstons and others who bought property in flood zones after the act was signed into law on July 6, 2012 will see their premiums increase nearly tenfold. Residents and businesses that already owned property in flood zones will see incremental increases of 25 percent annually.
(Excerpt) Read more at timesleader.com ...
It isn’t fair to increase their flood insurance. They should be grandfathered in and all new owners should expect to pay exorbitant rates.
PS....there will likely be no new owners with rates that high!!
Yes, people know that some areas they choose to live in may be flooded and so you can prepare for that. But there is also an issue of some government agency redefining what is part of a flood plain and this can change. Just ask the people in Colorado, for instance, who not only have no homes but also did not carry flood insurance.
We live in an area that could be expected to have hurricanes and so we are required to carry Wind Insurance. Not a problem. Even though we’ve had no hurricanes for five years our rates took a huge jump this last year. We were told it was because of costs associated with the forest fires in Texas. If someone wants to live near or in a treed area, they should pay for their own insurance and not expect me to pay for it. But that’s not how it works.
In a free market, prices of homes will have to adjust to account for the insurance cost.
At $1,000 per month for just flood insurance there will soon be a lot of these houses on the market with a lot fewer buyers... Hence more affordable.
My guess is their current house payment is maybe double or a little more than the insurance...
Pinellas County, where Treasure Island is located, is No. 1 on the list in the United States of National Flood Insurance Program policyholders who are currently receiving subsidies -- 13 percent, according to Pam Dubov, the county's property appraiser.
Grandfathered? You got to be kidding. That is like saying we should be grandfathered from Obamacare.
Might be cheaper here soon......
“It isn’t fair to increase their flood insurance.”
Caveat Emptor.
I feel for them, but they are responsible for their decisions, not the rest of the taxpayers.
Around $345K, so $12K is a huge number given the price of the property. Add property tax - I'd live somewhere else.
So, they get themselves on the hook for a house that goes for more than 1/2 mil... that's built on a flood plane, in a region that every decade or so gets a hurricane that effectively wipes off the map every dwelling in a hundred-square-mile swath. Not to mention storm surges that inundate tens of thousands of square miles of costal communities.
Of course, the rest of the time the weather is great, the sunsets are to die for, no snow, no sleet, yada yada.
The thing is, those idyllic conditions cost something. You've got to be ready to rebuild if the Big Bad Wolf blows your house down.
I wouldn't mind all those nice sunsets myself. But I look at the hurricane trade-off, and my conclusion is: "no thanks, I'm not that much of a gambler."
In past years, that gamble got picked up by the rest of the population. Most of whom don't get to enjoy the nice weather, ocean breezes, and beautiful sunsets.
They can always go out and get some market rate insurance.
Wife and I bought a retirement home in Florida last summer and we have not yet received any flood insurance notice. But when we do we will pay the increase . . . without crying, we don’t feel that anyone but us should shoulder the cost of the house. That being said, now why can’t the farmers pay for their crop insurance without the taxpayers subsidizing their premiums with 62 cents on the dollar and paying the administrative costs?
“”We have to possibly look at losing this house,” said Colin Elston, who is 71 and bought the home for $575,000. “We’re not rich, we’re comfortable. We had a very good plan for retirement. We’ve been very financially responsible.”
If the Elston’s can’t afford a $10,000 hiccup, then they most likely bought a property above their financial situation. We can’t fix stupid.
Property taxes on a $575,000 house in Florida are around $12,000 per year and can increase 3% or more per year.
Regular fire and theft and wind insurance on $575,000 house is around $6,000 per year.
The state of NC screws NC homeowners who live in coastal county locations that have never been hit by hurricane damage.
Property taxes on a $575,000 house in Florida are around $12,000 per year and can increase 3% or more per year.
Regular fire and theft and wind insurance on $575,000 house is around $6,000 per year
Flood insurance will cost them $10,000 per year.
The mortgage on a $575,000 house at 4% or more will cost $24,000 per year.
Electricity will cost $3,000 per year.
Other utilities will cost $2,000 per year.
These folks are looking at a house that will cost them $57,000 per year to live in. The view might be nice, but can they afford it?
why anyone would go into debt at age 70 for a home is beyond me. I can not wait to get my home payed for. No mortgage for me in about 5 years way before retirement. I rather have to money to have fun. They must have a lot in retirement to make 47 now 57,000 payments just for a place to live.
“”I rather have to money to have fun.””
I agree. Too many people get chained to their houses. They buy something more expensive than they can afford and then find in retirement that it gets really boring to sit at home every day because there is no money left to have fun outside the house.
“Over the past 35 years, Florida’s families have paid into the National
Flood Insurance Program over $16 billion, four times more than the
amount they have received in claim reimbursements."
--FL Governor Rick Scott
$10,000 annual increase is not "a hiccup." It is a recurring expense.
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