When the federal government implements changes to the National Flood Insurance Program at the beginning of October, Anna Maria Island will be the most impacted in the country, according to a report from the New York Times.
More residences there than in any other ZIPcode in America will see rate hikes of more than $1,200 per year on the barrier island at the southern tip of Tampa Bay. That number will only go up in coming years, according to the New York Times' analysis.
The changes to the program revolve around how insurance premiums are calculated, moving away from reliance on 100-year flood zone maps to a calculation that will for the first time take into account the size of a home and the distance from potential flood sources.
Federal officials say the goal is fairness — and also getting homeowners to understand the extent of the risk they face, and perhaps move to safer ground, reducing the human and financial toll of disasters, the Times reports.
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Local real estate experts told the Herald-Tribune that impacts to Anna Maria Island and other affluent locations is not likely to be immediate nor large since many of the homeowners on these barrier islands have the means to absorb the financial hit.
But the impact may be felt much more so in less affluent areas along places such as PhillippiCreek, the Myakka River and other locations that could see spikes in federal flood insurance premiums begin to price out potential buyers.
The changes to the way federal insurance premiums are determinedwill take affect on Oct. 1 for any new policies, with existing policies being impacted at the beginning of April.
Jeff Nungesser, owner and agent at Iron City Insurance in Sarasota, said before the changes to the federal program, the two most important factors in regard to a flood insurance premiums werethe flood zone maps and the a residence's height above or below the base flood elevation.
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New factors
The new premiums will be calculated by taking 10 factors into consideration, with the most importantbeing the distance from a flood source and the types of floods a property could experience, he said.
He said the cost to rebuild a property and its square footage are now also being considered when determining premiums, something that had not previously been part of the calculation.
Aninsurance policy Nungesser recently sold involved a Siesta Key home thatwould have paid about $1,000 per year in flood insurance. If the homeowner had used the federal insurance program, that person would have been required to pay $5,000 a year in flood insurance using the new method.
"I was able to find him a policy on the private market for $2,000 per year," Nungesser said.
The most immediate impact will be to new flood insurance policies, he said, as the federal program is capped at rate hikes of 18% per year for existing policies.
The New York Times report notes that with annual 18% increases, the new method of calculating flood insurance premiums could take as long as 20 years before it reaches the true cost of the flood insurance premium.
U.S. Rep. Vern Buchanan signed a bipartisan letter directed at Speaker of the House Nancy Pelosi andHouse Minority Leader Kevin McCarthy.
The letter signed by 53 U.S. representatives urges delay of implementation of the changes in the federal flood insurance program.
Buchanan sent a written statement to the Herald-Tribune that expressed "extreme concern" over the changes and how it could impact the 1.7 million flood insurance policy holders in Florida.
President Joe Biden "should step in and delay implementation of this new rate-setting program immediately," he wrote. "Floridians need access to affordable flood insurance that allows them to better protect their families, homes and businesses – and recover quickly after the next disaster strikes.”
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Potential market impacts
Shellie Young, a Realtor who specializes in Anna Maria Island properties for Premier Sotheby's International Realty, said even with a $1,200 rate increase, many of the people buying homes on the area's barrier islands will not see that as a significant obstacle.
"That's not going to concern them," she said. "Whatsoever."
Many of the waterfront property on Anna Maria Island have price tags well exceeding $1 million. She said many of her buyers are more concerned about potential impacts of tax increases than in flood insurance premium increases.
For other areas, she did say that the flood premium increase could begin to price out potential buyers.
Alex Krumm, president of the Realtor's Association of Sarasota and Manatee and owner broker at NextHome Excellence, agreed that it could become an issue for less wealthy buyers and even could affect property values in the area.
He said anytime costs are increased, there will be an impact of value. In this case, flood insurance, which is often required by banks issuing a mortgage, is an increase in cost and that will decrease demand.
"Your average Joe will feel the pinch much more than the affluent buyer," he said.
Times analysis
According to FEMA data, the New York Times reported, of the 3.4 million single-family homes around the country in the program, 2.4 million of those homes will see rates go up by no more than $120 in the first year, which is "similar to the typical annual increases under the current system."
"An additional 627,000 homes will see their costs fall," the Times said.
But, the Times added, "331,000 single-family homes around the country will face a significant rise in costs. More than 230,000 households will see increases of $120 to $240 in the first year; an additional 74,000 households will see costs go up between $240 and $360. For about 25,000 single-family homes, costs will jump between $360 and $1,200."
The Times reported noted "almost half of those 25,000 households are in Florida, many of them along the string of high-risk barrier islands that run from St. Petersburg south to Fort Myers," including high concentrations in Anna Maria, Siesta Keyand Boca Grande.
