Action benefits homeowners

There was some good news from Washington recently. Last week the Senate approved the Homeowner Flood Insurance Affordability Act with House amendments. The bill ends flood insurance rate increases homeowners across the country were facing.

According to the National Association of Realtors’ (NAR) President Steve Brown, “We appreciate the Senate’s swift action on the legislation, which is a responsible and balanced solution to the skyrocketing flood insurance premiums affecting residential and commercial properties that were unintentionally triggered by the Biggert-Waters reforms to the National Flood Insurance Program.”

The Biggert-Waters law of 2012 was intended to “phase-out” flood insurance subsidies in an effort to offset the National Flood Insurance Program’s debt of $24 billion. Homeowners who had received federal assistance to purchase flood insurance were expecting significant increases in flood insurance premiums.

The Homeowner Flood Insurance Affordability Act rescinds the Federal Emergency Management Agency’s authority to increase insurance rates at time of sale or flood map revision; and refunds the exorbitant rates paid by those buying a property prior to FEMA notifying them of the rate increase. The act also caps insurance rate increases to 18% annually on newer properties and 25% for “some” older ones.

Additionally, the bill tacks on a small assessment on policies until all homeowners are paying the total cost of flood insurance.

According to a recent survey of the 20 largest markets by Zillow, approximately 10% of renters across the country wish to buy a home within the next 12 months. CNBC translates these respondents to more than four million first-time home buyer sales, or a doubling of this sector’s amount last year. Usually, 40% first-time buyers make up the buyer population, but first-time buyers only comprised 26% in January, of this year according to the National Association of Realtors.

This year’s real estate market is expected to pick up. But the supply of homes, however, will have to catch up with the number of buyers to provide the real estate market a more even keel.

Although home construction decreased in February for the third month, applications for building permits increased to their highest level in four months.

The harsh winter weather has been blamed, in part, for the slight (0.2%) decrease in construction from January to February. In the Northeast alone, construction decreased 37.5%.

The apartment sector is being attributed to the overall decrease in construction as it dropped 1.2% in February. The construction of single-family homes increased 0.3% in February.

Residential construction has significantly risen in the past two years and contributed around one-third of a percentage point to the nation’s economic growth last year. Economists forecast that new and existing home sales will increase in 2014 due to the improving economy and consistent job growth.

When a new home is built, it creates an average of three jobs for a year and results in about $90,000 in tax revenue, according to the National Association of Homebuilders. Challenges for builders remain, though, such as a shortage of land parcels, increasing building costs and limited available of skilled labor.

 

Mary Ann Clark is a Realtor with Coldwell Banker at 177 West Putnam Avenue in Greenwich. Questions or comments may be emailed to [email protected]

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