Housing market already seeing effects of FEMA maps
Kyle Barnett - Apr 11, 2013
The housing market is seeing an immediate impact due to the unveiling of proposed Federal Emergency Management Agency (FEMA) flood insurance maps that will send rates soaring into the tens of thousands of dollars per year for some parish residents.
As proposed by FEMA, the new maps do not recognize the nearly century old Sunset Drainage District levee encompassing all of Bayou Gauche and much of Paradis and Des Allemands.
All of this is bad timing for a housing market that has recently regained strength since the mortgage crisis sent the economy into a spiral in 2008.
"We will battle through this obstacle as we have done so many times in the past. We are resilient. We will survive," Janina Kinler-Bellew, of the Kinler-Bellew team of Keller Williams Realty, said.
Although the new maps have not yet been adopted - and will take five to six years to implement if they are approved - Kinler-Bellew said there is already a noted change in the behavior of those seeking homes.
"Almost no one is interested in purchasing in Bayou Gauche now. The other affected areas are also seeing a decrease in demand," she said.
The Kinler-Bellew team currently has numerous listings in the Sunset Drainage District and they do not expect them to do well if the maps are put in place.
"There will be a significant decrease in sales in the affected areas," she said.
With some Bayou Gauche residents being given flood insurance quotes at nearly $20,000 per year, insurance rates on many properties would eclipse mortgage payments.
"The worst case scenario would be people losing their homes due to no longer being able to afford them yet not being able to sell them either. More foreclosures on the market would mean property values would plummet even further." Kinler-Bellew said.
The St. Charles Parish Assessorís Office has been actively working during the last few weeks to evaluate the market impact of the proposed flood maps.
"The public release of information from FEMA has already influenced the market value of homes in the affected areas, even though the information is still preliminary in nature," Assessor Tab Troxler said. "Market values will be lower in the affected areas for 2013, and our assessments will reflect this fact. The actual amount of impact is still being determined, but does appear to be significant."
Regina Allemand, a real estate agent with Gardner Realtors in Boutte, fielded several calls from concerned residents living within the Sunset Drainage District levee.
"There have been several people in that area who have called wanting advice on whether to sell their house or not. Iíve told them until the certainty is relieved or fulfilled to sit tight," she said.
She is giving one piece of advice to both those looking to buy and sell homes in the affected areas.
"Donít panic," Allemand said. "People are concerned and wondering if their property values will be falling. My response has been do not panic. It will all work out."
Randy Noel, president of local development company Reve Inc., said a big issue he has with the new maps concerns their difference from previous maps.
"FEMA is kind of changing the plan midstream," he said.
Noel said the decision to change the grandfathering system and eventually eliminate it will cause a lot of problems for homeowners and is essentially unfair to those who built homes at a lower elevation under older maps.
"In the past, If you have an existing policy in place you would be treated as ongoing because you were grandfathered in. Now they suddenly say when you sell your house they are going to change the way they are going to treat you. That doesnít seem kosher," he said.
Although Reve Inc. has been building their homes at least a foot and half higher than required throughout the parish and their homes are not likely to be affected very much by the remapping, Noel said the housing market in St. Charles Parish as a whole is interconnected and a ripple effect will be felt.
"If they canít sell their houses they canít buy another one, which hurts the move up market," Noel said. "That has a dampening effect on the whole real estate market by taking a whole group of houses out of the market."
Noel said it was difficult enough for the national housing market to regain its footing over the past few years and he does not want to see the market on the local level slip again.
"My biggest fear is that those people walk away from those homes," Noel said. "We just got through a recession which caused the foreclosure of millions of houses across the USA and the government paid out to those people. And here we may have to go through it again."
Local banks were contacted for this story but refused to comment.
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