Buying a Home in a Flood Zone

[hoyahoyasaxa]

My wife and I are currently house-hunting right now and are looking in a specific area where my wife's big family all live.  This particular area is in Rockland County, NY / Bergen County, NJ.  There aren't a lot of places in our price range (max $275k) but one came on the radar the other day. 

It's listed at just under $240k, and is in a great location.  I e-mailed the realtor asking if the house needed any work put into it and if there was anything else to indicate why the price was so low.  She said the following: "It is bank owned.  There is no noticeable work necessary to make it livable.  The bedrooms are on the small size.  It is located in a flood zone.  The seller has indicated that they will accept less than asking price."  I followed up with her regarding the flood zone portion asking if it has sustained water damage or if it takes on water.  She replied saying that it's a bank owned property and she hasn't spoken to the person who lives there.  But looking at the property file, there was a permit pulled in January 2011 for a sheet rock replacement."  She also mentioned that a person who lives a few houses down pays a relatively small amount ($2300/yr) for being in a high risk flood zone area.

Does anyone who knows a bit more about this sort of thing have any advice on what to do from here?  It seems like a solid house otherwise and I'd hate to immediately scratch this off the list if it's something that we can work with.

[lackofstache]

I wouldn't do it. Flood insurance just skyrocketed as of October 1. I'm in a Midwestern state w/o much risk, but have seen new quotes go from $1K up to $3500+. We've seen some now up to $6500/yr., again near a small, small river. As long as you've got a mortgage, the flood insurance is mandatory. Even at $2300/yr, on a 15 yr note, you'd be paying an extra $34,500 for insurance you're likely not to be able to utilize. You can get the exact Flood premium, though, through an insurance agent. I'd do this before committing.

[TrulyStashin]

OH PLEASE DON'T DO THIS!!!

In 2002, my (now ex-) husband and I found a lovely little property on 2 acres in an otherwise great location.  it was a steal!  It was in a 100-year flood plain and we did a bunch of research, including meeting with the county's emergency management people and checking into flood insurance.  The Emerg Management Director talked about the new flood gates they had just installed upstream and their policy of opening the gates before a big rain event in order to make more room in the reservoir to contain the anticipated rainfall.  We thought, "Great!  The County has a plan."   Flood insurance was on the expensive side but not exhorbitant (that is no longer true thanks to a 2012 reform http://www.fema.gov/flood-insurance-reform-act-2012).

We bought the property in Feb. 2002, largely because he LOVED it and our marriage was rocky so I was okay with anything that made him happy.  We split up in January of 2003.  I bought him out of the house so I could maintain our childrens' home and their lives would not be disrupted any more than necessary.

The first flood happened on Memorial Day of 2003 when unforecasted torrential rains overnight pushed the creek 200 feet up the backyard and into my house.  Firemen awoke me at 7 AM with the warning "Ma'am, your house is about to flood."  You find out who your friends are when you call them at the crack of dawn, in a panic, and ask them to help you move your furniture to high ground.   We were out of the house for six weeks and flood insurance denied much of my claim.  ServPro sued me for the balance (almost $13k), a suit which I settled several years later.

In early July, following backbreaking mostly-DIY cleanup which I did after my full time job and when I wasn't working my second job, we moved back in (the house was damaged not "totalled" so I didn't have much choice as I still had a mortgage).  I will never forget the smell, the primordial ooze stuck to EVERYTHING or finding a black snake in my living room under some debris.  I broke down in tears more than once.

Six weeks later, just before Labor Day of 2003, the forecasters started tracking a hurricane called Isabel.  I started packing. 

On Sept. 18, I got up early and finished the last chores.  I turned off the gas and the electric and took the kids to a friend's house.  I hoped and prayed that the whole fucking house would wash away.   That night and into the morning, Isabel passed directly overhead leaving my house under six feet of water for several days.  That was the start of a nearly two year ordeal that took me to the brink of bankruptcy, into court to fend off a custody challenge (now that I didn't have the house, apparently I shouldn't have the kids either), into battle with insurance companies, and ultimately turned me into a fierce advocate with our local, state, and federal officials who were less than helpful.   I still had a mortgage to pay, so my kids and I relied on FEMA rental assistance for 18 months.  I finally convinced the county to apply for a FEMA grant that exists in order to buy out chronic hazard properties (it's cheaper than repeat claims).

It was Christmas of 2004 before my kids and I had permanent housing again.  It was July of 2005 before the FEMA buy-out of my property (and four others) came through.  It was, without doubt, the worst two years of my life to that point and God willing I've paid my dues for the remainder of my time on this great blue orb.

There is no greater destroyer of wealth than a natural disaster.  Just typing this post has caused my heart to race and my blood pressure to skyrocket by dredging up the memories and the anxiety of that time.  I am sitting at my desk fighting back tears.

Somehow, with help and hard work, we survived.  In fact it made me stronger and it is a big part of why I went to law school in 2008 -- fighting and solving the problem for not just my family but for 5 families was an amazing feeling.  But to say it was awful and terrifying and stressful is the grossest of understatement.

DO NOT BUY THIS PROPERTY.

[Frankies Girl]

If the house has flooded in the past, or stands a strong likelihood of flooding now. Absolutely not.

My husband lived in a flood house when he was a child, and I can't imagine submitting a kid to that trauma over and over again, but that's what his parents did. He said it was sheer hell trying to clean up and dealing with all of the mess and took months for his father to DIY (which he did to keep more money from the insurance, but he also traveled during the week for work, so he didn't have to LIVE in the flooded house for the months it took to get it cleaned up). But even if you are DIY to save money, you'll have to deal with the giant mess and hope that materials are readily available as soon as possible.

All it takes is one time to get water in your house, destroy possessions, and having to live with weeks or months of water soaked, molding messes. And if it has already happened, then it will happen again... so I'd personally not touch anything like that.

[Mr.Macinstache]

Run Away.

I owned a house and even though 2 sq ft in the corner of my back yard was in a flood zone, I had to pay full flood insurance. It's a federal national program, so rates are NOT competitive. You pay ONE rate, and it is high. I had a $5000 deductible and it was still over $100 a month. It has to be through the roof now.

Ironically, part of my house did flood during a storm. It was not because of the creek near the property, but because of the faulty storm drains built on that street.

[TrulyStashin]

Run Away.

I owned a house and even though 2 sq ft in the corner of my back yard was in a flood zone, I had to pay full flood insurance. It's a federal national program, so rates are NOT competitive. You pay ONE rate, and it is high. I had a $5000 deductible and it was still over $100 a month. It has to be through the roof now.

Ironically, part of my house did flood during a storm. It was not because of the creek near the property, but because of the faulty storm drains built on that street.

Actually, until the 2012 reform, rates were subsidized by taxpayers so the rate you paid was BELOW market rates.  The 2012 reform removes the subsidy and people who own properties in flood zones will have to pay market rates.  I expect there will be a flood (pun intended) of refugees away from homes in flood zones as people 1) can no longer pay the premium and 2) can't sell it because of the premium so therefore 3) their only recourse is default/ foreclosure.

Though it will be painful for a lot of people and it will take time for the losses to work their way through the banks and RE market, overall, this is a good thing because the subsidy kept flood insurance rates at an artificially low level for decades with the unintended consequence of encouraging development in flood prone areas (which is just stupid). 

One of many references:  http://www.jsonline.com/business/flood-insurance-costs-on-the-rise-b99112536z1-226590521.html

[No Name Guy]

Do.  Not.  Under.  Any. Circumstances.  Buy. Property. In. A. Flood. Zone.

There.  Said it.  Unless you're a glutton for punishment and want to be moving shit every fall and living elsewhere for days or weeks per year when your place is flooded (even if the foundation has been raised such that the home isn't destroyed in the process).

Houses being flooded in a known flood zone are NOT a natural disaster.  They are the result of fools willfully getting in the way of the inevitable. 

Two things are going to happen, that illustrate this point.  I don't know when.  But I do know they'll happen. 

1)  New Orleans will be struck by a Cat 4 or 5 hurricane and be totally wiped out.  Its only a matter of time.
2)  The town of Orting (near Seattle, to the south) will be buried in 50 feet of mud and debris.  When?  The next time Mt. Rainier erupts and sends forth yet another Lahar (mudflow) to the area.

Some things my father advised when buying a house / property:

1)  Never buy a home in a flood zone.
2)  Never buy a home at the top of, on, or at the foot of steep terrain (landslide / earth movement).
3)  Never buy a home in an indefensible wildfire prone areas (such as brush choked canyons in So Cal).  [Open pine forest with a cleared defensible space around the structure, and fire resistant construction such as stucco and tile roof - evaluate on a case by case basis.]
4)  Don't bother living in tornado alley since you'd need literally a concrete pillbox / blockhouse for a home to survive a hit or near miss.
5)  In hurricane prone areas, stay out of areas that are subject to floods / storm surges and insure the structure is built to withstand 150 MPH wind speeds.
6)  In earthquake prone areas, insure the structure is designed or retrofitted for 8.0, has auto shut off valves for gas, water,etc.  Insure contents are appropriately strapped down (e.g. water tank, book cases, etc).
7)  With St. Helen's, Rainier or any of the other Cascade volcano's - stay the heck out of Lahar / blast zones.  In Hawaii, stay out of any area remotely subject to lava flows.

There are plenty of nice places to live where you don't need to go into harms way.

[Mr.Macinstache]

Run Away.

I owned a house and even though 2 sq ft in the corner of my back yard was in a flood zone, I had to pay full flood insurance. It's a federal national program, so rates are NOT competitive. You pay ONE rate, and it is high. I had a $5000 deductible and it was still over $100 a month. It has to be through the roof now.

Ironically, part of my house did flood during a storm. It was not because of the creek near the property, but because of the faulty storm drains built on that street.

Actually, until the 2012 reform, rates were subsidized by taxpayers so the rate you paid was BELOW market rates.  The 2012 reform removes the subsidy and people who own properties in flood zones will have to pay market rates.  I expect there will be a flood (pun intended) of refugees away from homes in flood zones as people 1) can no longer pay the premium and 2) can't sell it because of the premium so therefore 3) their only recourse is default/ foreclosure.

Though it will be painful for a lot of people and it will take time for the losses to work their way through the banks and RE market, overall, this is a good thing because the subsidy kept flood insurance rates at an artificially low level for decades with the unintended consequence of encouraging development in flood prone areas (which is just stupid). 

One of many references:  http://www.jsonline.com/business/flood-insurance-costs-on-the-rise-b99112536z1-226590521.html

Good...if it wasn't for that subsidy, you might have never bought your house that flooded.

Your story reminds me of mine, except on a very smaller scale. Only half of my house flooded, and no divorce. Glad you made it though... it sure does suck. We were lucky as hell to have sold our house and made some money, but that was because I knew the market was on a high and like you said, the subsidy was still going strong.

Our house in on top of the hill now, instead of at the bottom. I'll deal with the wind any day, over the water.

[kh]

I am a climate scientist working in the megadisaster branch of insurance. Back when I was still teaching geology classes, I told my kids that if they only came away from my class with one thing, that thing should be, "Don't live in a floodplain."

Now, flood insurance rates are on the verge of going way up, although there is some legislation in place that will likely stall this for a few years. NFIP, which is the major way to get flood insurance in the US, is $25 billion in the hole and getting worse all the time... Those rates HAVE to go up.

If you are in the 100 year floodplain, you have about a 1 in 4 chance of getting flooded out sometime during your 30 year mortgage. If you're in a coastal floodplain, the situation is actually worse than that, since sea level rise now adds a foot to the storm surge of every hurricane that hits the Northeast. In the next hundred years, we'll probably add another 4 feet on top of that.

Let this one go.

[hoyahoyasaxa]

Thanks, I appreciate all the responses.  In addition to all the "For the love of God, don't do this!" responses here, we heard from my wife's aunt who lives in the area and said that the houses around these blocks flood often and have to be evacuated during most major rain events, and that the government is trying to buy up these properties.  Oh well, back to the search.  Thanks again for your input.

[GuitarStv]

Could you raise the house on stilts?