Homeowners who have purchased low lying houses in high-risk flood zones recently don’t have many options in dealings with sharply higher flood insurance premiums, the result of a 2012 federal law. There’s selling, of course, and moving to a lower-risk area. Homeowners could also “go bare”, or self-insure, after paying off their mortgage to sidestep lenders’ flood-insurance requirements.
They could simply pay the higher premiums — estimated to be four times or more higher than their old ones, or hire an engineer and request that the Federal Emergency Management Agency (FEMA) reclassify the home on its Flood Insurance Rate Map. If approved, that could lower flood premiums.
Faced with these few options, some homeowners are exploring another option, albeit one that is both drastic and expensive: Elevation. Though the return on such an investment could take a decade to realize, experts say elevating the house also could make it much easier to eventually sell, and some government grants are available to defray costs, said Des Companion, Sarasota County’s floodplain coordinator.
“Flood insurance has definitely become the next ‘scary’ factor in home-buying,” said Maryann Lawler, a Keller Williams Realty agent in Bradenton.
Some analysts even believe the Biggert-Waters Flood Insurance Reform Act, if not amended or delayed by Congress, will have as big an impact on residential real estate nationwide as the recession.
“It’s going to have a devastating impact on prices of older homes in many coastal areas along the eastern seaboard and the Gulf coast,” said Jack McCabe, a Deerfield Beach-based real estate analyst.
“It also will affect people who live along various rivers across the U.S.,” he added. “We’ll have people whose flood insurance premiums go up 700 or 800 percent. Their $3,000 policies are all of a sudden $23,000 policies.”
Don Saba, a Sarasota appraiser, said that because many barrier island buyers pay with all cash, they can self-insure, but he also believes major renovation projects in flood zones will become less common. Instead, owners will tear down and rebuild higher.
Does it make sense?
Building experts are divided, though, on whether lifting a house makes economic sense. Architect Stan Tignor says several clients have inquired about elevating, but to date, not one project as been worth doing, he said.
Tignor, whose wife, Kristy, is a coastal engineer and an expert at flood-map revision studies, said one key quagmire is the requirement that elevated homes be brought up to 2010 building-code standards, which calls for 160-mph wind resistance.
Greg Yantorno, Sarasota County’s building official, said that is not entirely true.
“Once they elevate, they are out of the flood zone. The only thing that would have to be in compliance with code is the new foundation and the attachment of the house to the foundation,” he said, adding the county has not recently received any permit applications to lift houses.
The option does have its proponents, too.
“With FEMA raising flood insurance rates, the cost of raising a home to meet elevational requirements becomes more feasible,” said contractor John Chalifoux, whose own 1890s house in Punta Gorda was moved and elevated in 2007.
“Homeowners can finance the cost of construction, and payments would be cheaper than the increased insurance rates,” he added. “Tearing down a home, especially a historic one, should never be an option.”
House mover Brett Johnson, of R.E. Johnson & Sons House Movers, and historic renovation specialist Pat Ball, of Ball Construction, say lifting houses can make sense, but each case is unique. Johnson estimates the average wooden house on piers costs about $12 per square foot to lift, with another $8-$10 per square foot for a new foundation. Ball notes the cost can run as much as $50,000 — at $30 to $35 a square foot for a concrete-block house — and as high as $200,000 or more for large houses.
When Erika Brigham elevated her small 1925 cottage — a tiny creek runs behind it — on Ohio Place near downtown Sarasota, the cost was $17,000. The expense was lower because the 1,000-square-foot home was already on concrete blocks, making it easier than if it had been “slab-on-grade.”
“I am very glad I did it,” Brigham said. As a result, her annual insurance premium, for $140,000 worth of coverage, is $403.
The National Flood Insurance Program (NFIP) caps structural coverage at $250,000, though waterfront property owners can choose to augment that coverage with “excess lines” of coverage from private providers. Owners also can shave premium costs by increasing deductibles and either dropping or reducing “contents coverage” that adds about $540 for $50,000 worth of coverage in an “A” flood zone.
Case by case
Homeowners who consider lifting their residences need to think about not only the cost of elevating, but also the projected cost of insurance if the house is not lifted, and the length of time the owner expects to remain in the house.
Underlying land value is important, too, especially in a “V” (velocity) zone along the coast. In other words, experts warn against elevating a $50,000 cottage on a $2 million lot.
For most owners or buyers, that is a “tear-down.” They would sell the property and let the next owner build a mansion at or above the BFE.
“It was not my intent to raise the house,” Brigham said. “But the estimate for the work was more than 50 percent of the depreciated cost of the building, which made it necessary to raise it to the present flood elevation.” Another important expense involves hiring a structural engineer, said Brian Bishop, Brigham’s general contractor.
“It can be like solving a Rubik’s Cube that has been painted all black,” Bishop added.
Though complex and invasive, elevation’s yield can be increased by spending a bit more for materials and lifting a house above FEMA’s determined “base flood elevation,” experts say. This is called “adding freeboard.”
That’s especially prudent when building a new house.
A new $250,000 house in a moderate or high risk flood zone, for instance, that has its lowest living floor four feet below base flood elevation, would have a $9,500 a year flood premium, FEMA notes.
But that same home, at base flood elevation, would have a premium of just $1,410 annually — and generate enough savings to pay for the elevation over a decade.
Going three feet higher would reduce the flood premium even more, to $427 a year, FEMA notes.
“If you go higher than the BFE, there’s a discount for every six inches,” said contractor John King, of Rampart Homes. “At a home I just built, we went an extra six inches and it cut the flood insurance in half, to $750 a year.”
Beyond the costs associated with elevating homes, there are other factors, experts say.
One is how aesthetically pleasing and accessible the home will be after being lifted. Stairs, patios and garages can become more difficult to get to, or enjoy, once a home is elevated.
Perhaps not surprisingly, emotion comes into play, too. If an owner loves his house, he or she may decide to elevate it rather than raze it and build new.
“It is going to be a tough dialogue and it is going to be more individual than it is going to be (cost vs. savings) ratios,” Ball said. “It’s site-specific. If you are considering a remodel anyway, it sure would be smart to get everything conforming while you are at it.”
How to start
The elevation process typically starts by paying a surveyor anywhere from $200 to $400 to determine the structure’s current elevation in relation to base flood elevation.
Ironically, the lower the elevation in relation to base flood, the more sense it makes to lift a house, because low houses carry high premiums.
It doesn’t cost much more to lift a house 5 feet than it does to lift it 2 feet.
Landscape planning is essential too, to conceal taller foundations and create a pleasing transition to the yard.
At Brigham’s house, the front steps are staggered, with four separate landings and a sun porch, to soften the 4-foot ascent from ground level to the front door. The exposed foundation is decorated with sea shells cemented to the walls.
Even so, it is the cost effectiveness of elevating vs. paying higher insurance that many prospective lifters are focusing on.
“It is a nightmare,” said Mary Dakkak, an Allstate insurance agent in Sarasota. “We feel bad for these homeowners. If they had known about it (Biggert-Waters) ahead of time, they may not have bought these houses last year.”NOTEStart
