As readers of this blog know, my vitriol tends to be directed at the political elephants, but in the political maneuvering that has led to the effective shutdown of the National Flood Insurance Program (for the second time this year), the donkeys are just as much the asses. The National Flood Insurance Program is an essential safety net for homeowners in flood zones. Because Congress failed to extend authorization for the program, it expired on June 1st. So for over two weeks now, homeowners needing flood insurance have been unable to get new policies. (Existing policies are still in force.) Home buyers purchasing homes in flood zones using mortgage financing can only close when they have flood insurance in place. Those closings aren't happening because they can't get it.
Why hasn't the NFIP been reauthorized? Because our oh-so-wise Democratic politicians in Washington will only attach a reauthorization to other bills that contain other, more controversial provisions that are toxic to the other side of the aisle. They're holding flood insurance hostage to achieve other totally unrelated agendas. It's downright outrageous. But then, that's Washington.
Real Estate agents still sell houses next to "scenic" creeks and streams.
Caveat Emptor.
Posted by: LL | June 20, 2010 at 08:18 PM
The NFIP isn't dead forever, it's just caught in politics. So of course we continue to sell houses next to streams and creeks, because people like having houses next to streams and creeks. But those houses need flood insurance, and the ones that are in contract and set to close, but delayed because of the NFIP not issuing policies, will close once the asses in D.C. finish their political maneuvering and the buyers can get a policy.
Posted by: David Knudsen | June 20, 2010 at 08:53 PM
It's of interest that you see nothing wrong in selling people properties that have close proximity to streams and creeks. It's sad that a lot of the negative aftermath could be prevented with a disclosure of what happens in a severe four-day rainstorm. (I'm not talking about a power-line or tree going down.)
Posted by: LL | June 22, 2010 at 06:31 PM
New home sales came out today.
Big miss.
Good chart from bespoke investment below.
Shows all you realtors how bad things are.
In 2004 - new home sales were 3 to 4x (over a million) what they are today at 300,000.
http://bit.ly/9gpwD6
Posted by: joe | June 23, 2010 at 11:07 AM
I think the buyers probably know what happens during a flood, too. It's not that big of a mystery and it will absolutely be disclosed to the buyer if they try to get a loan or inquire about flood insurance with their insurance company. There are a lot of restrictions on vacation homes with respect to the NFIP and now they're talking about eliminating the subsidy all together for vacation homes so if that's your target set of buyers then the NFIP may soon be a mute point. That doesn't mean you can't get insurance. It just means you'll pay more for it.
Posted by: Ken | June 23, 2010 at 12:39 PM