The annual postcard from my township assessor arrived. At first glance it looked like good news. The appraisal of my New Jersey coast home was lower by almost $60,000, which indicated that this year's taxes should go down.

Then I thought about it. There was a reason why the assessment was less. Assessments reflect housing values, and my house, like most others in the Long Beach Island area of Ocean County, had been flooded by Superstorm Sandy.

Now we, as homeowners, will be faced with a myriad of new problems and all of them, in some way, seem to involve insurance. My conclusion: it is getting more and more difficult to either repair -- or sell -- our homes.

Risky business

The natural inclination of property insurance companies is to avoid risk. So when an area has too much risk, insurers back off, as they did in the Gulf Coast states after Hurricane Katrina hit in 2005.

Just how much is too much? Sandy is the sixth costliest insurance event in our country's history, with up to $25 billion in losses just for private insurance companies, predicts Insurance Information Institute (III) President Bob Hartwig. And now two of the top 20 disasters -- Superstorm Sandy and Hurricane Irene -- have wreaked havoc on the previously pristine Northeast.

So it should come as no surprise if your insurance company either doubles your rate or sends you on your way to find a smaller and under-funded carrier. It happened in Florida following the one-two punch of Hurricanes Katrina and Wilma.

Waiting for payment

Another problem: Federal flood insurance isn't paying off the way policyholders thought it would. "Hundreds -- if not thousands -- still search for answers as they remain displaced from homes that await flood insurance payouts," says an article in my local newspaper.

And this is also true for private insurance payments. When there is a mortgage involved, insurance checks are issued jointly to the mortgage holder and the homeowner. New York Gov. Andrew Cuomo has released a list of the banks with the worst Sandy aid statistics, including 10 that are withholding more than 50 percent of what homeowners are entitled to.

Banks seem to be withholding payments due to homeowners with damaged properties because they fear that the policyholders could take the money and run, leaving the banks with these highly mortgaged and heavily damaged homes.

Open the floodgates

Another problem weighing on the future of coastal housing is the nearly bankrupt federal flood insurance program. While the average claim for wind damage from Sandy is a modest $6,600, Hartwig says the average flood insurance claim is $43,000. And the National Flood Insurance Program, which is $19 billion underwater, is likely to pay out another $12 billion to $15 billion.

Don't expect U.S. taxpayers to foot the bill. The Biggert-Waters Act passed last year is placing the burden squarely on the shoulders of coastal homeowners. The first step: redrawing flood plain maps. We won't know the full extent of what these maps will show until 2014, but you can bet that they will expand official flood plains, based on the extensive flooding which took place. Only six inches below the current flood plain level, my house took on two feet of water during Sandy.

Then we have to contend with flood insurance rates, which weren't exactly low and will climb 25 percent a year until they reach a still undefined "actuarially correct rate."


One viable option for homeowner's in coastal areas: "Raise" your house on pilings to allow oncoming floodwater to pass underneath. But here is the catch-22. While homeowners can apply for Hazard Mitigation funds to pay for 75 percent of the cost of demolishing their damaged homes to raise them up, this is strictly a reimbursement program, which means that the homeowner has to front the money in the hope he or she actually gets it back from the government.

And based on flood insurance reimbursements, no one is very hopeful.

"The money isn't coming in," says one homebuilder and mover. "The people I work with are paying out of their own pocket."

Ray of sunshine

Now I understand why my assessment was lowered. Given the uncertainty of building or rebuilding and the potential yearly cost of insurance, who would want to own a home on the coast?

So is there a ray of sunshine? Just this: State governments such as New York are buying up properties in flood-ravaged areas and encouraging those residents to move elsewhere. These areas will become "wet lands" and you will never be able to build there again.

So for those who still want to own that ocean- or bay-front home, the options are slimmer -- and the price of the remaining properties will probably be higher.