July Update for the Outer Banks

We are half way through the season and the traffic is an unkind reminder. Saturdays have been a bear for sure. The weather has been quite pleasant for the most part. With the exception of good old Arthur swinging through over the 4th! The beaches north of Oregon Inlet were spared from any major damage. Not even an evacuation! That was odd for sure.

There are a few noteworthy topics this month. 

Mid-Currituck Bridge After months and months of silence on this topic there’s been a few rumblings. Not good news at all, even though two local Reps are staying positive, it’s an unlikely project to be revived any time soon.

You be the judge – Article 1 and Article 2:

Insurance for NC Unless you act today, thousands of NC property owners could continue to face sharp increases in their insurance rates, as much as 35% for barrier islands and 25% statewide. The North Carolina General Assembly is considering a bill right now that would protect them. It would create transparency, accuracy, and fairness in the insurance rate-setting process. The House passed the bill unanimously, and now it’s time for the Senate to take action. Please contact NC State Senator immediately and request a vote on HB 519, Property Insurance Rate-Making Reform.

Click here for more info.

Market Update  Not much has changed since last month. Activity is strong, while prices continue to be affected by the large inventory numbers. Average days on the market is still over 200 days for most areas. The month’s supply of inventory for most locations is at least 12 months with Duck showing 18 and Corolla at a whopping 30 months. What does this mean? It means we are still recovering. This is not a short term process.

I’m putting together a special email with a full Fall Forecast for the Outer Banks Market. If you want to receive the Fall Forecast, email me at il[email protected] with the words “Fall Forecast”. 

FLOOD INSURANCE UPDATE


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.

Happy 4th of July from the Outer Banks!

Happy 4th!!!

As is typical for the Outer Banks this time of year, there’s not a lot of activity to report…other than everyone is having fun at the beach.  The weather has been rainy and humid!  We haven’t seen extreme hot temps which is good.  I hope you’re enjoying your summer so far!

Bridge – No news.  Don’t count on it in our lifetime.

Insurance – Rates hikes for homeowners insurance went into effect July 1st.  This will impact buyers and the amount of mortgage they can now qualify for based on the expenses.

Market – The real estate market usually slows down in July.  Barring a hurricane, we should see a spike in activity in about 4 weeks.  If you want to get a jump on the market of buying or selling check out my website (here) or contact me for more information.

Duck Oceanfront A second public hearing will be held on July 17th at 1 p.m. regarding the regulation of oceanfront accessory structures such as dune decks, walkovers and oceanfront pools. Information on the proposed ordinance which could greatly affect the construction or reconstruction of oceanfront pools and eliminate the development and redevelopment of any dunes decks can be found here.

Occupancy Tax – Looks like guests will be asked to pay an additional 1% tax on all vacation rentals soon! Click here for details.

If you’re on the Outer Banks for the 4th of July, here is a list of activities you can check out.

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.