You just found your dream home. You’ve always wanted to live in a humble cottage on a bit of land, surrounded by a white picket fence. And you found her. She’s beautiful. Recently renovated. Greenest grass in the neighborhood. And it’s in your budget. What’s the catch? It’s in a flood zone.
Living in the United States, it’s likely that you or someone you know has been impacted by flooding at some point. Even if you don’t live near the coast, it is likely you have been impacted by flooding in one way or another. That’s because floods are the most common natural disaster in our country. As long as there is rain, there is a possibility for flooding. Unfortunately, floods also happen to be the most expensive natural disaster for homeowners to recover from. While living in a flood zone doesn’t mean that you are guaranteed flooding, it does mean that your homeownership might look a little different from others.
In the National Flood Insurance Program (NFIP), a flood is defined as surface water from any source, occurring in at least two acres of two or more properties (can include mudflow). If your house is in a designated flood zone, it means there is increased risk that a flood (as defined by NFIP) will occur. It is important to research what type of insurance you will need. Your homeowners policy on your house will not necessarily cover flood-related damage. For this reason, it is important that you speak with someone who specializes in flood insurance. The average homeowners flood insurance premium is $700. In some areas, such as those that have been victims of floods in the past, premiums can surpass $5,000. It all depends on where you live. The map below is a representation of current flood zone data compiled by First Street Foundation.
While it is evident there are many hot spots in coastal areas, there are plenty of ‘flyover states’ with thousands of designated flood zones as well. Essentially, everyone lives in an area that can flood, some more than others. According to the First Street Foundation, there’s approximately 23.5 million properties at risk of flooding in America.
The chart above shows data from flooding sources local to Birmingham, AL. If your house is in a flood zone, there’s a chance one of these sources may be the cause (though there are plenty of other flood sources as well). Remember, flood zone maps are updated by FEMA (Federal Emergency Management Agency) constantly. Just because your home isn’t in a flood zone now doesn’t mean it won’t be in the future.
A recent study from Stanford associate professor Marshall Burke, indicates that single-family homes zoned in floodplains lose roughly two percent of their value. For a $500,000 house, that is $10,500. If you include this in addition to other costs such as insurance, the total price should be pushed down between 4.7 and 10.6 percent! That could mean a total subtraction of $53,000 to the same house! Before you put an offer in, make sure that both you and your real estate agent have thoroughly investigated the lasting impact of living in a flood zone. You could potentially save both time and money through proper research.
So, should you buy that beautiful cottage? Honestly, it’s up to you! As long as you are fully aware of the risks that come with owning a home in a designated flood zone and you are comfortable with paying additional costs, you should still buy your dream home. Just be prepared to fully research the area and the way other surrounding homes have been affected financially.
We may not be able to snap our fingers and get you out of a flood zone, but we certainly can help you choose a home that fits your needs! Shoot us a text or call us at 205.291.8806!
B’ham Realty
1923 3rd Ave N, Birmingham, AL 35203
office@bhamrealtyco.com
205.291.8806
Further Research:
- “A Guide to Buying a House in a Flood Zone.” Rocket Mortgage, https://www.rocketmortgage.com/learn/buying-a-house-in-a-flood-zone.
- “Frequently Asked Questions Learn about Flood Insurance in Alabama.” FAQs – Alabama Flood Insurance, https://alabamafloodinsurance.org/faqs. Martin, Erik J.
- “Buying a House in a Flood Zone.” Bankrate, https://www.bankrate.com/mortgages/buying-a-house-in-a-flood-zone/ Sheridan, Terry.
- “6 Ways to Protect Your Home from Flooding.” Bankrate, https://www.bankrate.com/finance/weather/natural-disasters/6-ways-protect-home-flooding.aspx. University, Stanford.
- “Flood Risk’s Impact on Home Values.” Stanford News, 24 Apr. 2021, https://news.stanford.edu/2021/04/26/flood-risks-impact-home-values/.
https://map1.msc.fema.gov/mipdata/01073CV001D.pdf?LOC=a7a6060d2606fb0c4702b0a149f141b1 (see for most up to date FIS report for Jefferson County)
