Homeowners get them all the time in the mail. So it came as no surprise when the latest postcard with the smiling face of a local realtor arrived, boasting about a recent sale down the block from my house at the New Jersey shore. But the realtor really didn't have any bragging rights.
The pictured waterfront home sold for a paltry $155,000, compared to a few years ago before Superstorm Sandy, when these properties were assessed at $350,000, and often sold for much more.
Down for the count
Times have changed, and while Sandy delivered the first crippling blow, the knockout punch came from, of all places, the federal government, in the form of 10-fold flood insurance price increases. Those of us who live on the Jersey shore have been told in no uncertain terms that flood insurance to cover small homes like mine could cost up to $31,000 a year.
Even health insurers wouldn't -- and couldn't -- do this kind of damage without facing retribution from regulators and voters. But there is strong support in Congress, and by lobbying groups, to raise rates to the point where they literally wipe out middle-class coastal homeowners.
Stronger than the storm?
The National Flood Insurance Program (NFIP) is heavily in debt -- $25 billion by most estimates -- because it has been running at a deficit for five decades. Congress passed the Biggert-Waters Act in 2012 to stem that tide and put the program on sound financial footing.
But like most of what Congress does and doesn't do, no one understood the devastating effect it would have on coastal property owners, particularly after the devastation from Sandy added to the bill.
Now that bill has to be paid -- and it will have to be footed, at least in New Jersey -- by those least able to afford it after already paying huge amounts to repair damaged homes. New Jerseyans may believe Gov. Christie's mantra that "we're stronger than the storm," until they realize that their property is worth less than half of what it once was. Then they may have to cut and run, leaving our once vibrant coastline deserted.
Spreading the pain
But New Jerseyans are not alone. Homeowners in low-lying areas from New England to Louisiana are all feeling the pain of this devastating "insurance tax," prompting powerful Congressional lawmakers to demand that these higher flood insurance rates be delayed until we can learn how to better cope.
The New York Times is reporting that home sales in once booming areas such as Florida's Key West and the beach in St. Petersburg on its west coast "have come to a near standstill."
Louisiana's insurance Commissioner James Donelon, who also serves as president of the National Association of Insurance Commissioners, says he's going to sue the federal government to stop the "unaffordable" price increases, and may join with Mississippi and Florida in their fight.
Even the official who runs the NFIP, W. Craig Fugate, suggested that there should be some wiggle room for those suddenly hit with overwhelming insurance costs.
"I think we need to look at affordability for people who live there," Fugate told Congress last month, urging it to take action.
One way to get some breathing room is to hold off on these huge increases until after the federal government provides accurate and comprehensive flood maps. To comply with the old flood map guidelines in my area one of my neighbors built up her house by a foot. Turns out it wasn't the right decision; Sandy churned two feet of water through our homes, so it's unlikely that it will meet the new guidelines. Another option is to raise your home on stilts. Some of my neighbors are doing this, but at a huge cost.
No coastline for poor people
Still others are simply selling out for whatever they are offered. And that's sad. New Jerseyan Bruce Springsteen, who got his start at the Stone Pony in Asbury Park, said at last year's concert to benefit the victims of Superstorm Sandy that he loved the Jersey shore because it was a place where someone "with a few bucks" could buy a home.
Given the rise in flood insurance rates, the Jersey shore and other shore communities around the country will become places where only millionaires like Bruce can buy a home.