Dream Homes Blog 3-29-13 – Rebuilding after Sandy
Greetings NJ –
Hope this post finds you well and getting ready for a holiday weekend with your family. It’s been a few days since I last posted and in keeping with Life After Sandy, the week was definitely challenging. Each day brings frustration and triumph and sometimes it seems like we are taking 1 step forward and 2 steps back.
The quote above is Latin for “ Don’t let the bastards grind you down!!” It’s a useful saying to remember when you are being beaten up by circumstance.
Governor Christie spoke last week in Manasquan and reiterated what he has been saying at a number of meetings – we decided to adopt the FEMA guidelines so people could have a basis to move forward.
I like our governor. He has integrity. Whether or not you agree with his politics or his style, he takes positions and sticks with them regardless of popular opinion. If he hadn’t adopted the December 2012 FEMA guidelines, the glacial pace of reconstructing NJ, would be half of what it is currently.
Things are happening though. When I drive any number of streets in Little Egg, Beach Haven West, Lavalette & Ocean Beach, I am finally starting to see some activity. We are working on a dozen projects and only a few are actually active, so it is understandable to me, although still depressing to drive down the street and see through house after house that is stripped to the rafters.
As usual, it comes down to one step at a time, one house at a time. That’s the only way we will get where we need to be.
Getting back to flood insurance for the moment, you may know that the cause of all of the rate confusion and increase is the Biggert-Waters Flood Insurance Reform Act of 2012.
The Center for Insurance Policy and Research did a nice recap that is only 6 pages and understandable here is the link: http://www.naic.org/documents/cipr_events_2012_cipr_summit_overview.pdf
(If you haven’t read War and Peace and need some light reading, you can Google the Act and read all 68 single spaced, titillating, mind numbing pages. I did. I wouldn’t bother if I were you. The summary is fine.)
As a typical dollars and sense example, based on a $250,000 house, if you were paying $1000 a year pre-Sandy, your home is currently at elevation 6 and the new ABFE is 8 (which means for the best rates you would rebuild to elevation 10 and we are recommending ABFE + 4, which would be 12), you are 4-6 feet below the recommended base flood elevation. if you don’t move your house, you are going to be paying $30,000 a year in flood insurance. You will pay a maximum of 25% increase per year until you reach the new rate since you are grandfathered as an existing homeowner, but if you sell your home, your buyer will immediately start paying the new rate.
Obviously not a good workable solution. You are essentially forced to lift, demolish and rebuild, or move.
If you move your house to ABFE 8, you will be paying about $7000 a year.
If you move your house to ABFE +2, which is elevation 10, you will be paying the lowest rate. That rate might be $3000 a year versus the $1000 you were paying. The reason for this is that that FEMA is essentially bankrupt and they have been subsidizing 90% of the homeowners in coastal regions with the wealthiest 10% for the last 20 years. The Biggert-Waters Flood Insurance Reform Act is meant to try and correct the imbalance and bring rates to the actual, correct non-subsidized levels they would be in a free market.
Once again, I am recommending ABFE +4 to our clients, to allow for FEMA to stumble along at a glacial pace and proceed (possibly) to raise elevations even more than they have already. Worst case you spend a little extra money and get a better view…you won’t have to rebuild again.
A great resource, which I have recommended numerous times, is www.region2coastal.com .That will give you all the information in the world that you need and don’t really want to know.
Don’t hold your breath waiting on the new FEMA elevations, which are supposed to be out in August or September. When they do post their new flood elevations, they are subject to appeal from each municipality, as well as the general public. That process could go on forever. Joining Stop Fema may make you feel better and it is certainly a worthwhile organization, but it’s doubtful it will actually change your individual scenario.
As an additional note, when FEMA does come out with new elevations, it is doubtful there will be changes in advisory elevation, except for them to possibly increase slightly. Best case – if you are in a V zone, you get downgraded to an A. If you are already in an A zone, it’s probably as good as it can be for your location. The only negative thing would be for you to be downgraded to a V zone, which I doubt would happen but one never knows.
On the positive side, for anyone in an A zone, we will be able to just raise your house to the new elevation and block it up underneath. Additional concrete piers (not pilings) may be needed within the perimeter of the foundation if the soils are not as good as they should be. If your house is on a slab, a new floor system must be built after the house is raised. The best case (in a range of lousy scenarios) is if your house was built on pilings which support a concrete grade beam, which supports a block & concrete pier crawl space.
One more comment which bears repeating. I went on 8 site inspections last week and did 5 estimates. Out of the 8 homes, 4 of them were clearly demolish and rebuild scenarios, and none of these homeowners had even considered that option. No sense going through the grief and aggravation of rebuilding if your home is 50 years old , built to ancient building codes, stripped on the inside and not worth more than $250,000.
More soon. Stay well NJ.
Rebuild, Renovate, Raise or Repair Your Home from Storm Sandy
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