Buying in a flood zone? Keep these 4 things top of mind.

For the past four years, hurricanes have caused above-average flooding. This year, we expected — and got — more of the same. But hurricane season — and all the rain and flooding that came with it — seems to have officially ended last week. So if you think it's dry enough to start your search for your next home, keep this in mind: the 2022 (non-hurricane related) flood season is right around the corner. 

And we're not just talking about local rivers and streams from excessive rainfall. Coastal flooding continues to be a problem. According to the National Oceanic and Atmospheric Administration (NOAA) report, coastal communities saw twice as many high tide flooding days between May 2020 and April 2021 as they did 20 years ago. And the trend of near-record high tides is expected to continue through April 2022.

So what's this got to do with you and your house-hunting expeditions? Plenty. You need to do your due diligence and know what to do when you fall in love with a dream home that is (finally) in your price range but it's also in a flood zone. 

4 key considerations

To help you make an informed decision about whether a home is right for you — and you're willing to take the risk — check out our four tips to keep in mind before buying a home in a flood zone.

What flood zone are you in?

The Federal Emergency Management Agency (FEMA) reports that, between 1996 and 2019, 99% of U.S. counties were affected by at least one flooding event. Yet many homeowners still do not consider flooding a significant risk unless they live in a designated high-risk area. Learning that your prospective new home is in a flood zone should cause you to be concerned, but it shouldn't necessarily cause you to run for the hills. Many homes technically located in a Federal Emergency Management Agency (FEMA) flood zone are homes with minimal risk. 

Do a flood zone location search for your current home or the one you're thinking of buying. Zones C or X are generally considered low risk. If it's shaded, it means that historically, flood risk has been mitigated somehow, like with a dam or levy. Your mortgage lender may not require flood insurance for this zone, but you still might want to go this route as floods have gotten more erratic and harder to predict with recent climate changes. If you plan to purchase a home in Zones A or V — which are higher-risk areas — your mortgage lender will require you to buy flood insurance. And that could get expensive. 

How old is the home you're thinking of buying?

The National Flood Insurance Program (NFIP) uses FEMA's flood insurance rate map to inform zoning areas, set construction standards and help prevent developers from building homes in high-risk areas or that may not withstand base flooding. As weather and climate conditions change, so do flood maps. 

Consider planned commercial development, new housing developments, even the construction of new roads. These factors reduce the amount of available land needed to absorb water from heavy rainfall and melting snow. This means that homes initially built in low-risk areas can be rezoned into high-risk areas and may no longer meet the necessary standards for the new flood zone. If you're looking at a home in a flood zone, determine when the structure was built. A home constructed before the availability of the current map may not only be more vulnerable to flooding it could also be subject to higher insurance premiums.

Get confirmation on elevation.

If the home you're looking to buy is indeed in a high-risk flood zone, you may be asked for an EC, an elevation certificate. This paperwork contains data on the building's location, characteristics and elevation compared to the estimated height of expected floodwaters. Basically, it's used by insurance agents and mortgage lenders to assess risk and set premiums. But it's also a document that you will want to look at before making an offer on the home. Any seller worth their salt will have one ready to email you if you ask. 

The good news is that the elevation certificate might contain info that reduces the buyer's stress about flooding. For example, instead of it being a deal-breaker, you might discover that the flood risk doesn't affect your entire property and only impacts a patch of your backyard without getting anywhere near your home's foundation. Maybe that's an inconvenience you can live with as long as the premiums aren't so high. So get your EC and be flood-smart. Better the devil you know than the devil you don't.

Weigh the cost vs. the risk

Since homeowners insurance doesn't cover damage due to flooding, a separate flood insurance policy is recommended. According to FEMA, homeowners in low or moderate risk areas account for about 25% of all flood insurance claims. The organization recommends that homeowners get insured even if the risk is minimal and insurance is not required, based on the idea that a small monthly payment could save thousands of dollars in future repair costs. 

Getting covered is a personal decision that you and your bank account need to debate. Just note that according to a recent article in Bankrate, the average cost of flood insurance in the United States is $700 per year. But the higher your risk, the higher your premium. 

And while mortgage lenders require that you insure the building only, you might want to also think about insuring your belongings. Doing so will increase the policy costs, of course, so before buying a home in a flood zone, get flood insurance quotes and make sure it's an expense your budget can afford. 

Talk to us

Buying a house or condo in a flood zone can be challenging — but then again, buying a home is a big undertaking no matter what flood zone it's in. Before getting too far down the road, do as much research as possible to fully understand just how severe flooding could be and assess your appetite for the risk. Doing so before you find the home of your dreams — and get all emotionally attached — is the best bet. 

To get more insights on what to do if the home you are interested in is flood-prone and what to do about it, why not reach out to one of our local loan officers to discuss.