February Market Report

With all the insurance and septic news, I’m going to be brief on this month’s market report and just give you the numbers straight up. With only one month in, there isn’t a lot to analyze anyway.

Not much has changed since December, except in Kill Devil Hills showing the only noticeable difference. Which is not unusual for this time of year. We will compare again in April and see if anything changes.

Area Active Now Active Dec

Area  Active Now  Active Dec
Corolla 81 88
Duck 16 17
Sshores 16 17
Kitty Hawk 15 18
KDH 49 60
Nags Head 43 40

Not a lot going on just yet, but don’t worry things will heat up in a few weeks! I’ll be watching.

If you’d like more information on buying or selling, please reach out.

Currituck County’s PRELIMINARY Updated Flood Maps

The following information is copied with permission from the Outer Banks Association of REALTORS(R) .

Currituck County’s PRELIMINARY updated flood maps have been released. Information pdf on how to access the site. The link will take you to the flood map FRIS page, click on ok and then select the County (Currituck).In the upper right corner you will see “effective”. Go there and select “preliminary”. You will be able to look at the new proposed maps that will hopefully be adopted within the next year.

If you zoom in, you will start to see aerial views. By clicking on the map in a particular area you will get the information on the right side of the screen or you can search by using magnifying glass on menu at top left. Most of our county is seeing a significant change to elevations being lowered and many homes will come out of the flood zones or be classified into a lower zone (VE to AE for an example According to the NC Floodplain Mapping Office, the preliminary maps show that Currituck County has 11.5 square miles of V Zone (89.5% decrease from current maps) and 249.5 square miles of A Zone (24.75% increase):

  • ‪Under current mapping, there are 1,097 buildings in the V Zone; new maps show 126 buildings in the V Zone;
  • ‪Current maps show 7,020 buildings in the A Zone; new maps show 2,767 buildings the A Zone.

There are oceanfront V Zone properties that are coming completely out of the special flood hazard area – being changed to an X Zone!

Please keep in mind that these are only preliminary maps. They will have to undergo a 90-day appeal process, a public meeting process and final FEMA approval. This entire process could take up to 18 months. In the meantime –  good news overall for homeowners in the special flood hazard area!


A vote is expected this week on a newly revised version of H.R. 3370 – Homeowner Flood Insurance Affordability Act.  Please continue making calls this week to other NC House members and ask that they VOTE YES on the bill:

District         Name           Party       Phone

1      Butterfield, G.K.           D                  202-225-3101
2      Ellmers, Renee             R                  202-225-4531
3     Jones, Walter B.            R                  202-225-3415
4     Price, David                    D                  202-225-1784
5     Foxx, Virginia               R                  202-225-2071
6     Coble, Howard               R                  202-225-3065
7     McIntyre, Mike             D                  202-225-2731
8     Hudson, Richard           R                  202-225-3715
9      Pittenger, Robert         R                  202-225-1976
10   McHenry, Patrick T.    R                  202-225-2576
11      Meadows, Mark     R                  202-225-6401
12      Vacant
13      Holding, George    R                  202-225-3032

The latest version of the bill can be found here http://docs.house.gov/billsthisweek/20140303/BILLS-113hr3370v2-SUS.pdf

The legislation does the following:

  • Reinstates Grandfathering – This bill permanently repeals Section 207 of the Biggert-Waters Act, meaning that grandfathering is reinstated. All post-FIRM properties built to code at the time of construction will have protection from rate spikes due to new mapping – for example, if you built to +2 Base Flood Elevation in an AE zone, you stay at +2, AE zone, regardless of new maps. Also importantly, the grandfathering stays with the property, not the policy.
  • Caps Annual Rate Increases at 15% – This bill decreases FEMA’s authority to raise premiums. The bill prevents FEMA from increasing premiums within a single property class beyond a 15 percent average a year, with an individual cap of eighteen percent a year. Pre Biggert-Waters, the class average cap was 10%. Biggert-Waters raised the class average cap to 20%. The bill also requires a 5% minimum annual increase on pre-FIRM primary residence policies that are not at full risk. The updated legislation also states that FEMA shall strive to minimize the number of policies with premium increases that exceed one percent of the total coverage of the policy (e.g., 1% of $250,000 = $2,500).
  • Refunds policyholders who purchased pre-FIRM homes after Biggert-Waters (7/6/12) and were subsequently charged higher rates after their 10-1-14 renewal.
Permanently Removes the Sales Trigger – This bill removes the policy sales trigger, which allows a purchaser to take advantage of a phase in. The new purchaser is treated the same as the current property owner.
  • Allows for Annual Surcharges – This legislation applies an annual surcharge of $25 for primary residences and $250 for second homes and businesses, until subsidized policies reach full risk rates. All revenue from these assessments would be placed in the NFIP reserve fund, which was established to ensure funds are available for meeting the expected future obligations of the NFIP.
Funds the Affordability Study and Mandates Completion – This legislation funds the affordability study required by Biggert-Waters and mandates its completion in two years.
Includes the Home Improvement Threshold – This bill returns the “substantial improvement threshold” (i.e. renovations and remodeling) to the historic 50% of a structure’s fair market value level. Under Biggert-Waters, premium increases are triggered when the renovation investments meet 30% of the home’s value.
  • Additional Policies Included: This legislation includes several other provisions including preserving the basement exception, allowing for payments to be made in monthly installments, and reimbursing policy holders for successful map appeals. It also includes a study of voluntary community-based flood insurance options that would assess options, methods, and strategies for making available voluntary community-based flood insurance policies through the NFIP; gives states authority to regulate private flood insurance; and mandates that regulations and rate tables be published in the National Register and open for comment for not less than 45 days before becoming final. 

Information courtesy of the Outer Banks Association of Realtors Legislative Council.


Senate Bill 1610/House Bill 3370 – Homeowner Flood Insurance Affordability Act of 2013

In North Carolina, please Contacting Senator Kay Hagan: (202) 224-6342 and Senator Richard Burr: (202) 224-3154.

To find the contact number for the Senator and Representative in your State/District go to:



Current Local impact examples:

LOWER MARKET VALUE?: Bank owned property (land and house) for sale in Avon at $189,000. Home was built in 2005 in an AE zone. Property is Sound side, three rows back from the water, is elevated and did not flood in Hurricane Irene. Prior owner paid $1,200 a year for flood insurance. 2006 revised flood maps put the house in a VE zone (highest risk zone). Prior owner was able to keep the rate premium based on the AE zone. Due to foreclosure, the bank did not carry a flood policy. Potential buyer was quoted $15,000 for a new flood insurance policy. Buyer walked away and a cash buyer purchased the property for $149,000. The new owner was not required to purchase a flood policy since there was not a mortgage on the property.

OUT OF BUSINESS?: An older motel property on the oceanfront in Kill Devil Hills was built before the first flood maps became effective. The owner received a discount on flood insurance and paid approximately $5,600 a year in premium. After asking his insurance agent what his ultimate flood premium would be after phased in rate increases, he was told approximately $55,000.

FORECLOSURE?: A home built prior to 2006 flood maps, located in an AE zone. Owner pays $800 a year for flood insurance. 2006 maps put the home in a VE zone. Owner was quoted $21,216 a year for $250,000 of structure coverage, $100,000 of contents coverage and a $10,000 deductible under the VE zone risk. The owner states that this will make the house unsellable and unaffordable to keep.

A CURRENT OWNER TRYING TO SELL THEIR VACATION PROPERTY RECEIVED THIS NEWS! Their policy is grandfathered to an AE Zone and their renewal premium is $363 a year. If they lose the grandfathered option the renewal would be rated to their current VE Zone and the premium will be $5,870 a year.

REASON… While the law phases in rate increases on older structures, it also removes the grandfathering option when new maps show a change in elevation or flood zone. Structures that weren’t in a flood zone when built may now be required to carry flood insurance. Homes that were built to flood standards in place at the time of construction will now be required to pay to the risk shown under any future revision to the flood map. Revised flood maps will be released in NC tentatively July 2014 but properties where no flood insurance policy exists are already being impacted when a new policy premium is quoted.

As REALTORS we have a responsibility to inform you of this change in the law and how it may impact you.  We continue to fight this law by asking for a total delay of the implementation.  BUT, we can’t do it alone.  We need you! It will take a majority of all US Senators and Representatives to reverse the impacts of this law.

(Written by the Outer Banks Association of Realtors Legislative Sub-committee on Flood Insurance Affordability)

Outer Banks Flood Insurance Update

Members of OBAR attended the National Association of Realtors Legislative Meetings in Raleigh recently and shared information about the potential detrimental impact of the Biggert-Waters Act, passed in July 2012 to reform the National Flood Insurance Program. Most legislators seemed to be unaware of this information. NAR’s Land Use and Property Rights Committee appointed a special Flood Insurance Study Committee to review the legislation further.

Below are talking points to share with local, state and national legislators when you have the opportunity:

BACKGROUND: Congress passed the Biggert-Waters Act (BW-12) on July 6, 2012.
BW-12, a provision of H.R. 4348 – Surface Transportation Act, includes several amendments to the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973 intended to significantly improve the financial sustainability of the National Flood Insurance Program (NFIP). The NFIP is currently operating at a deficit due to large catastrophic losses incurred in 2005 and 2012.
While BW-12 addresses specific program flaws that have been attributed to a large portion of total program losses, many BW-12 provisions will have a detrimental impact on home ownership, housing affordability, property market values and the overall sustainability of the program.

Biggert-Waters 2012 should be amended to address the following: 

  1. Affordability of Coverage: The cost of property insurance (homeowners, wind and hail, flood, etc.) affects housing affordability, market values, financing and investment in communities. The NFIP is mandated to be widely available and affordable.  Due to BW-12 changes to the rate, premium and coverage structure, flood insurance premiums could increase up to 1000% or more for some policyholders. This huge increase could force policyholders to sell their homes. It has the potential to force homeowners into foreclosure. Property values decline when the cost of insurance becomes so high thus impacting local tax revenues. Homeowners without a mortgage will not participate in the program due to the high cost of coverage, thereby negatively impacting market penetration and the long-term sustainability and affordability of the program. For policyholders without a mortgage, FEMA aid is seen as de facto flood insurance. There is no incentive to participate in the program when the cost is prohibitive.
  2. Loss of Grandfathering: The grandfathering provision should remain. If a structure is built to the NFIP standards in place at time of construction, then a homeowner should not be penalized if map revisions cause a significant change to the zone or BFE of a structure. This will cause an increase in flood insurance premiums thus impacting mortgage payments. BW-12 will create situations where homeowners would not have originally qualified for their mortgage if the lender considered future flood insurance premiums increases. This reform measure is unfair and excessive considering other BW-12 reform measures that will have a greater impact in reducing future flood hazard risk and increasing premium revenues.
  3. Rate Structure: BW-12 includes the provision that “catastrophic loss years” be included to calculate the average historical loss year. The NFIP was self-sustaining for over 30 years. In 2005, Hurricane Katrina caused extreme catastrophic losses. Including these “outlier” event losses to determine NFIP rates will cause artificially high increases in rates. BW-12 also increases the annual rate increase cap from 10% to 20%. This is an arbitrary and capricious allowance and has nothing to do with risk. The maximum limit of coverage is only $250,000 for residential policies and $500,000 for commercial structures. The issue of primary residence replacement cost coverage rates being equal to actual cash value coverage rates for second homes needs to be addressed.
  4. Administrative Costs: While BW-12 includes reforms that put the burden of raising program revenues and reducing flood hazard risks on individual policyholders, it does not address the efficiency and overall administrative costs of the program. More than one-third of NFIP premiums are paid to Write-Your-Own (WYO) companies. FEMA does not know how much of what is paid to these companies is used to cover expenses or how much is actually profit. The cost to administer the program should be based on a per policy cost, not a commission percentage of premium. The passage of BW-12 creates a windfall for the 90 WYO companies that service NFIP policies.
  5. A Flood Insurance Summit, sponsored by OBAR and attended by NAR and NCAR Senior Regulatory representatives, Congressional and State representatives, local elected officials and OBAR leadership was held in early May. The Summit proved to be an eye-opener for those attending. After an informational morning presentation, attendees toured the Outer Banks and got a better understanding of the diverse housing inventory and how the structures would be impacted by the new flood insurance reforms.  A copy of the flood insurance presentation is posted on www.outerbanksrealtors.com under the Advocacy tab which can be found by clicking:

Please keep in mind that the term “subsidized” refers to policies on structures built prior to the effective date of flood maps (approx… 1974) that receive substantial discounts on their premiums.  Substantial discounts on flood insurance were offered to existing structures when flood maps became effective to encourage them to participate in the program.

FYI: NAR has posted a link to an article by an Associated Press reporter on the rising cost of homeowners insurance that was released this week.  OBAR/OBHBA Government Affairs Consultant Willo Kelly is quoted in the article.

Click HERE for the entire article.


Crucial Information regarding changes IN FORCE for the National Flood Insurance Program

NFIP_LogoFor the last several years the National Flood Insurance Program (NFIP) has experienced periods of expiration and availability of issuance policies.  Each time Congress would pass a temporary bill extending the program for another short period.  Finally a bill was introduced that would extend the program for 5 years and not have these continued interruptions.  What we didn’t know existed in the several thousand pages of The Biggert-Water Act of 2012 were the changes in premiums and coverage that I will highlight below.

  • First, these changes are not being imposed by FEMA or by the NFIP.  These are legislative changes from Congress that can be undone by Congress with the right voices being heard.
  • Starting January 1, 2013, any non-primary resident home that was built before flood maps were instituted (this is called Pre-FIRM) will see an increase in their premiums as the “discounts/subsidies” are removed.
  • Starting August 1, 2013 commercial properties will have their subsidies/discounts removed and the new premium in place 25% per year for 4 years.  For example, if the NEW, non-discounted premium is $5,000 per year and the old premium was $500 per year, the difference is $4500.  The increase of the $4500 will apply 25% at a time over the next 4 years until the full premium of $5,000 is paid.
  • Starting August 1, 2013, subsidies will be similarly phased out at 25 percent a year for severe repetitive (more than 4 claims) loss properties consisting of 1-4 residences, and properties that have incurred flood-related damages where claims payments exceed the fair market value. FYI – Severe Repetitive Loss means four or more claims payments of over $5,000 or two claims that exceed the value of the property.
  • New policies written on pre-FIRM buildings (primary or non-primary residence) due to a sale or deliberate lapse will be issued at full-risk rates. THERE IS NO MORE GRANDFATHERING! Prior to the bill being passed, the flood map zone in effect at the time of construction remained with the house when it was sold.
  • Beginning in 2014, premium rates for other properties, including non-subsidized properties – such as PRIMARY RESIDENCES AND SECOND HOMES BUILT AFTER 1974 – will increase as new or revised flood maps become effective. We are expecting new flood maps the latter part of 2014. This is not far off folks!
  • Full risk rates will be phased in at 20% a year for five years for these properties. While FEMA works through the grandfathering issue on primary residences, they have removed the 2-year policy limit for the Preferred Risk Policy Extension until the new rates are implemented.
  • When new flood maps become effective, they will include a rating for a new zone – a Coastal A Zone. This zone will affect areas behind the V-zone and other areas that experience a limit of wave action from 3 ft. to 1 ½ ft. For insurance purposes, a policyholder pays to the zone that touches his structure.
  • Increases the limit for annual rate increases within any risk classification of structures from 10 percent to 20 percent.  This means they can now raise your premium by 20% a year, anytime they deem necessary.
  • Minimum annual deductibles on claims are changed to $1500 for coverage up to $100,000 and $2000 for coverage over $100,000 for pre-FIRM properties, and $1,000 and $1,250 for below and above $100,000 coverage for post-FIRM properties.
  • Requires FEMA to notify property owners when their properties are included in, or are removed from, an area covered my mandatory insurance purchase requirements. Also requires notification of Senators and House Members whose States or Districts are affected by map changes.

These changes, if left in place, will have an impact on the local value of your property during a re-sale on the Outer Banks.

Please contact me with any questions you have regarding this.  You can also contact your insurance agent to find out exactly what changes you can expect to your specific premiums.  If you need information for another insurance agent, I’ll be happy to share the name of a trusted professional I work with regularly.

Major changes coming to the National Flood Insurance Program

There are major changes coming to the National Flood Insurance Program in 2013 and it seems second homes and vacation homes are the primary target.  If your home falls into certain criteria be prepared for discontinued subsidies and ultimately an increase in your premiums.

Another point of interest in relationship to this is the plans from CAMA to re-map our area effective in 2014.  This will directly impact what flood plain a home falls into and in the end the flood insurance premium paid.

I’ll report updates and new information as it becomes available.

The following was taken from a newsletter provided by the local Outer Banks Association of Realtors.


Below is additional information from last week’s briefing about new legislation that may affect flood insurance policy rates for home and business owners in your community.
The Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12) requires FEMA to take immediate steps to eliminate a variety of existing flood insurance subsidies and calls for a number of changes in how the program operates. The new rates will reflect the full flood risk of an insured building, and some insurance subsidies and discounts will be phased out and eventually eliminated. Rates on almost all buildings that are, or will be, in Special Flood Hazard Areas (SFHAs) will be revised over time to reflect full flood risks. Based on various conditions set forth in the law, subsidies and grandfathered rates will be eliminated for most properties in the future.

Effective on January 1, 2013, flood insurance policy rates for some older non-primary residences in SFHAs that received subsidized rates based on their “pre-Flood Insurance Rate Map” (pre-FIRM) status will increase by 25 percent a year until they reflect the full-risk rate. A pre-FIRM building is one that was built before the community’s first flood map became effective (1974) and has not been substantially damaged or improved. If the building will be lived in for less than 80 percent of the policy year, it is considered to be a non-primary residence. Click here to read a National Flood Insurance Program (NFIP) bulletin that provides additional details around the legislation.

Effective August 1, 2013, the NFIP will also begin eliminating subsidized premiums for other buildings as mandated by Section 100205 of BW-12. Click here to read the full bulletin and note that key changes include:

• Subsidies will be phased out for severe repetitive loss properties consisting of 1-4 residences, business properties, and properties that have incurred flood-related damages where claims payments exceed the fair market value of the property.
• Properties with subsidized rates will move directly to full-risk rates after a sale of the property or after the policy has lapsed.
• NEW policies will be issued at full-risk rates.
• Policyholders should be aware that allowing a policy to lapse could be costly. A new application will be required and full-risk rates will take effect.

Beginning in 2014, premium rates for other properties, including non-subsidized properties, will increase as new or revised flood insurance rate maps become effective and full risk rates are phased in for these properties. These premium rate increases will include properties in areas that have received new or revised flood insurance rate maps since July 6, 2012 (the date of enactment Changes in the Flood Insurance Program Preliminary Considerations for Rebuilding – Early Considerations for Rebuilding of the new law). Additionally, even if you build to minimum standards today, you will be subject to significant rate increases upon remapping if your flood risk changes in the future.

Important Note on Preferred Risk Policies (PRPs)As of January 1, 2013, PRPs issued on properties located in a high-risk area may continue beyond the previously designated two-year period until FEMA completes analysis and implements a revised premium structure put in place with BW-12. For some policyholders in areas flooded by Sandy, the impact of these changes could be substantial. For this reason, the Federal Emergency Management Agency (FEMA) encourages property owners to consider flood insurance costs when making decisions about how high to rebuild. A brochure that details some of the legislation’s impacts on building is also available here. Scroll down and click on the download/print link.

For More Information:For the latest NFIP Bulletins about the implementation of these changes, visit www.nfipiservice.com/nfip_docs.html. For more details about flood insurance, visit http://www.floodsmart.gov/floodsmart/.