Housing market slows retreat from rising seas and larger storms

Chuck and Terry Nowiski lived in their country-style farmhouse with a wrap-around porch for 36 years before it flooded. After hurricanes Matthew and Florence, they said “yes” to the state’s offer to buy their house and tear it down.

Almost three years later, they are still waiting for the money. Worse still, they say it’s for the value of the home before the storms of 2016 and 2018. Now they fear they won’t be able to buy the home they want with the federal disaster dollars they will get. .

“It would be pennies compared to what the market is,” Terry Nowiski said of the couple’s home outside the town of Linden, about 25 miles north of Fayetteville, North Carolina . “I’ve seen housing prices last year go from $200,000 to $350,000 to $450,000.”

Hot real estate markets have made some homeowners reluctant to participate in voluntary flood buyout programs, impacting efforts to keep people away from flooding due to rising seas, intensifying hurricanes and more frequent storms.

Flood buyout programs typically buy flood-prone homes, tear them down, and turn the property into green space. This can help prevent deaths and health problems associated with flooding, such as mold-related respiratory problems and emotional trauma.

Buyouts are also considered cheaper for taxpayers than repairing and rebuilding flooded homes — sometimes multiple times — with government payments and federal flood insurance.

The programs are run by local and state governments which often use grants from federal agencies. The Federal Emergency Management Agency says it has provided nearly $3.5 billion to help communities acquire nearly 50,000 properties over the past three decades.

“It’s basically the tool we have now to help people move to a safer place,” said Anna Weber, senior policy analyst at the Natural Resources Defense Council. “And so it should work as well as it can.”

But some cities have seen their interest in voluntary programs wane in the wake of rising house prices. Some states even offer extra money to persuade people to get out of harm’s way.

People who accept buyouts generally want to move to similar homes on higher ground in the same community. But some worry that the redemption dollars aren’t enough. Others reject them because the offers from private buyers were too good to refuse. Homes remained occupied – and threatened.

And while experts say housing markets are cooling as interest rates rise, the challenge of finding affordable homes is likely to get worse.

“Replacement housing will only get more expensive as rising waters often mean more competition for less housing,” said Jesse M. Keenan, professor of real estate at the University of Washington’s School of Architecture. Tulane. “Nothing will be easy. Nothing will be cheap.

Concerns about finding affordable housing outside flood-prone areas are nothing new, said Miyuki Hino, a professor in the Department of Urban and Regional Planning at the University of North Carolina.

Programs have traditionally struggled to help everyone move into similar housing, especially low-income people. Inflated housing prices have shone a spotlight on the limits.

“Typically, they weren’t designed from the start with the idea of ​​’How does this household end up in a better place?’ “, Hino said. “The focus was on removing buildings from the floodplain.”

Buyout offers can be based on a home’s fair market value as well as its pre-storm value. The latter usually stems from the assumption that a house is worth less because it has been damaged. But rising house prices have complicated that assumption, while amplifying concerns about the often years-long wait for FEMA dollars.

FEMA press secretary Jeremy Edwards said in a statement that the process can be lengthy, in part because the agency must determine that a buyout is cost-effective and meets environmental and historic preservation requirements.

Edwards also said FEMA now allows an increased payment of up to $31,000 to help homeowners find comparable housing.

Democratic U.S. Representatives Sean Casten of Illinois and Earl Blumenauer of Oregon last month introduced legislation to shorten wait times and provide more assistance.

“Science clearly shows that this climate-induced devastation will only get worse and cost more,” Casten said.

Meanwhile, the Nowiskis are waiting to find out how much money they will get for the buyout they agreed to in 2019.

Retired and in their sixties, they want to stay local without taking out a mortgage. Their daughter is nearby, as is their non-profit ministry to help struggling boys.

They are now considering selling to a “house flipper” or simply staying in their home, which is near a tributary of the Cape Fear River.

North Carolina Emergency Management, which operates the buyout program where the Nowiskis live, said in an email that a state fund provides up to $50,000 to help people find similar homes when federal grants are not enough.

Keith Acree, spokesman for the agency, acknowledged that buyouts through federal programs can be a lengthy process.

“Landlords who want to get out of a property quickly will often pursue other methods, if they can afford it,” he said.

Other states also offer cash in addition to federal disaster dollars. In response to rising home prices, the South Carolina Office of Resilience partnered with coastal Horry County to create a “market adjustment incentive” in February, said Ran Reinhard, director of mitigation. from the office.

The incentive ranges from $10,000 to $50,000 in addition to the home’s pre-storm value offered by the buyback program. It seems to make a difference.

Twenty-seven offers have been made and 21 owners have signed up to date.

“We wanted to make sure a homeowner could stay on their own and in their community,” Reinhard said.

But in some areas, the housing market has been so competitive that private buyers have outbid the government – ​​even when it offers fair market value.

Mecklenburg County in North Carolina, which includes the city of Charlotte, is one such place. He created his own self-funded program to keep people away from the Catawba River and other waterways that can overflow from heavy rains.

Rising house prices are not helping matters. For example, the estimated cash value of a Charlotte home fell from around $250,000 in 2020 to around $325,000 at the end of 2021. The property was later purchased by a private buyer for what county officials estimate be up to $100,000 above the asking price.

“I would tell you it’s probably twice as hard to get to the floodplain buyout close table,” said Dave Canaan, county stormwater services manager before stepping down in early June.

In Chesapeake, Va., no one participated in the buyout program last year, said Robb Braidwood, emergency management coordinator.

Many older homes have been built along the Elizabeth River and its tributaries which swell due to heavy rains and storms pushing water from the Chesapeake Bay.

There’s a fading sense of urgency because the last major flood was in 2016, Braidwood said. Another issue is the wait time for FEMA money and the limits on its grants. Rising house prices are also likely to be to blame.

“We do it once a year when we call everyone who’s flooded,” Braidwood said. “And we just hear crickets coming back.”

Joseph Noble, whose North Carolina home sits near a tributary of the Neuse River, rejected a FEMA-funded buyout offer after it was flooded twice in 2016.

He said the money was not enough to buy a similar house nearby – and that was before prices warmed up in the small town of Kinston, about 80 miles (130 kilometers) to the southeast of Raleigh.

He worries about the kind of buyout offer he would get if he suffered a flood this year.

“All it takes is a good hurricane passing in our direction,” Noble said.

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