Flood insurance rate spikes impacting Louisville home sales
LOUISVILLE, KY (WAVE) - Federal changes are causing flood insurance premiums to skyrocket nationwide and they're already impacting home sales in Jefferson County.
About 6,400 homes are situated in the flood plain or in flood-prone parts of the county, according to Metro Sewer District data. A new federal law impacts only new and recent insurance policies, but some fear it will have a significant impact on property values.
The law will allow FEMA to re-draw flood maps and end federal subsidies for flood insurance premiums, in response to hurricanes and other natural disasters that've put FEMA programs in debt.
Debbie Rood, a Louisville real estate agent with RE/MAX Properties East, said she lost one sale last week when a potential home buyer realized he'd have premiums more than ten times higher than what the seller was paying.
"That would've been an extra $800 a month for my buyer, which priced him out of the market," she said. "We had to let it go."
In other parts of the country, property values have declined because of the higher cost of flood insurance. That could also happen in Louisville, Rood said.
"Even if you can afford the flood insurance, a lot of people around you won't be able to, and property values are going to go down," she said.
A bipartisan group in Congress, including lawmakers from southern states, introduced legislation Tuesday aiming to delay the FEMA law's effects.
"They have followed the rules. They built to the right elevation when they built. And yet, through no fault of their own they are facing not just rate increases to make the system solvent, but literally in some cases unaffordable rate increases which could throw them out of their homes," said Sen. David Vitter, R-Louisiana.
The law affects only policies taken out since July 2012 and not to homeowners like Bill Ballard, who lives in Louisville's flood plain and has carried insurance for years.
Ballard now pays about $2,200 a year for insurance. He said it's worthwhile because his home has endured three major floods since he moved in, including one during the early October storms.
"You pay the flood insurance, and this is why, "Ballard said, looking around at the basement he's still fixing. "If we didn't have it, there would be no recovery from this."
Ballard's basement filled with more than five feet of water during the floods, forcing his family to evacuate for two days. Insurance claims will total $25,000 for the damage, he said.
He said no one would buy his property if he wanted to sell. Instead, Metro government should buy out the flood-prone homes, tear them down, and convert them to green space, Ballard said.
That process is ongoing, a Metro Sewer District spokesman has said.
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