Table of Contents
What is a Flood Zone?
A flood zone has been designated by the Federal Emergency Management Agency (FEMA) as an area where there is some risk.
FEMA classifies these on the map according to its flood potential into:
- Moderate-to-low-risk areas
- High-risk areas
- Undetermined risk areas
But also, these zones are classified into two major categories:
- Special Flood Hazard Areas (SFHAs) have a 1 out of 4 chance of suffering some type of flood in the following thirty years. These are zones beginning with the letters A to V.
- Non-SFHAs, on the other hand, represent those parts beginning with the letter B, C, or X and have moderate- to low-risk areas.
How Do I Find Out if I’m in a Flood Zone
The first step into being prepared for a potential water stream is to find out if the living zone is indeed prone to one. If purchasing, this is an essential element in the transaction that cannot be overlooked.
So if wondering “how do I find out if I’m in a flood zone,” or “is my house in a flood zone,” the following step is to check the FEMA flood map for flood risk by address.
The information there includes floodways, risk places, and the risk level of the home. Realtors will usually not share this data with the potential buyer or renter of a house because it is not a legal requirement to do so in many states.
Therefore, it is within the new buyer or renter to research that information by themselves and bring it to the lender.
Step #1: Research if the Area is Within High-Risk Flood Zones
Before getting a property, the first step is to find out if the location has a high risk for water surges. As mentioned before, this is something that real estate agents will usually overlook.
This is not to say they necessarily have the wrong intention of not bringing it up, but since flooding is not an event that frequently happens, it is easy for everyone to skip it. But a person who is about to get a property can easily make this research fast and easy.
Simply go to the Federal Emergency Management Agency’s (FEMA) web portal at FEMA.org, and within the National Flood Services database, there is free information on flood risk by address. All that is needed is to share the place’s address, and the database will find out if it is within a risky zone on the map.
This service is completely free, and users get updated information. There is no privacy issue involved in checking the flood zone. If by any chance, the property searched is a lot and has no address, the address of the nearest property will suffice.
Step #2: Identify Flood Zones
One of the things users usually find when entering the FEMA website is that it contains several categories and includes terms that can be confusing. To make things more comfortable and practical, the service has classified zones by categories. The following are those categories and what each one means:
- Zone A: The most common type; they are a 100-year floodplain. They have a 1% annual chance of inundation and 26% over a 30-year mortgage life. Properties in these zones pose a particular hazard and are not located near the coast but close to lakes, rivers, and other bodies of water. There are five different types of Zone A floodplains, and each one will affect the type of insurance that will be applied to a home.
- Zone B: Homes here have a moderate risk.
- Zone C: Homes in these places face minimal risk.
- Zone D: These are those that may pose a risk, but it has not been determined yet.
- Zone V: High risk because this is near coastal areas.
- Zone X: This is Zones B & C combined. This is how they are identified in new flood insurance rate maps.
Step #3a: Property is in a Risky Flood Zone – What Comes Next Insurance-Wise?
Once it has been established that the area is risky (verified by a quailed agent), homeowners need to find flood insurance as soon as possible. Research if the current insurance provider is in the National Flood Insurance Program or if such insurance can be added.
If this is not possible, the best next step is to contact the NFIP Referral center to request a referral or use FEMA’s tool for finding a flood insurance provider.
Homeowners should not wait for a disaster to hit them to get this done. Keep in mind that insurances usually take effect up until 30 days after it has been approved.
It might also be a good idea to know when the flood zone determination was made. There is a probability that this valuation was done decades ago and without carefully analyzing the property’s specific characteristics in question. In this case, a property can be legally removed from a risky area. This is a good move to take if the plan is to sell the property.
Step #3b: Property is Not in a Risky Flood Area, so That is Cool, Right?
Low risk does not mean zero risks. There is potentially no living area that is 100% free of getting flooded at some point. This is why even when a house is in a low-risk area, protection must be sought.
When these events happen, 25% of claims come from homes in low-risk areas. These zones can also change for many reasons.
Stay in the loop for such changes in the FEMA maps.
Step #4: Research Flood Insurance
So, if the home is in a dangerous area, the next step is to find out if there is flood insurance. Water damage is usually not included in most homeowner policies. However, if this house is in a high-risk zone, then insurance is mandatory.
If there is no such damage coverage, the best thing to do is consider a separate policy. The National Flood Insurance Program (NFIP) subsidizes flood insurance premiums for homeowners. It’s a federal program with an average annual premium of $700, but this will vary depending on the type of zone a house is in. This program offers $250,000 for the structure and $100,000 for contents.
Step #5: Stay Informed
Whether a home is at a very low or high-risk area, it is imperative to keep tabs on how the risk level might change. This is done through FEMA’s updates.
It is critical to continually assess the risk of a place where one is living periodically. If there is a plan for moving, it is good to know the new property’s stream risk.
Topography changes or new buildings are coming up all the time. This will affect floodplains and flood zone designations. The smartest thing to do to stay calm about a potential surge is to check FEMA’s designation every five years.
Remembering something every five years is not easy. One way to help is to center the data around a memorable holiday or date. Online calendars allow settings to save events to every five years. The data is backed up regardless of how many times the cell phone is changed.
Types of Floods in the U.S.
In most cases, a flood is caused by hurricanes, heavy rainfall, or storms. This is why houses located close to coastal areas and large bodies of water share the same high risk. The Penn Institute for Urban Research classifies them in the U.S. in three categories:
- Flooding in the Coast: Hurricanes and tropical cyclones can push ocean water inland. Homes located close to the coast can also become inundated by the tide. These are the reasons why FEMA classifies them as high risk.
- Flooding in the Riverine: Like coastal areas, these are risk areas because they are located next to a river or stream. However, these events are harder to predict. A riverine flood happens when a river goes over its bank, either at a slow pace or fast (flash flooding)
- Flooding in Surface Water: This is also known as rainfall flooding or stormwater. It happens when rainwater and runoff collect themselves in a basin and occurs mostly in low regions. If the rain is too heavy, the sewage systems will get overwhelmed, allowing the collection of water to overflow towards the street.
Pros and Cons of Getting a House in a Risk Zone
Now that there is an understanding of what a danger zone is and how they are classified, it is essential to note that there could be some positive points. Once one is at peace with the fact that pretty much everywhere has a low risk of inundation, it is easier to make the call on what type of property to buy.
- The property price will be lower. This is probably the most obvious benefit and even the most sought for when closing an estate deal. According to real estate experts, a house located in an SFHA will not sell, and one not located in an SFHA.
- Most dream houses are located near the coast. Thinking of all the homes near the beach, it is safe to believe that many dream homes are located there. People will seek beachfront or waterfront communities to wake up to a portion of water rather than at the center of town.
- Over time, flood zones find a natural way of controlling erosions and aftermath. This may include more vegetation, which helps prevent the sliding of land that usually comes from rundowns. As a result, flood velocities and peaks are controlled better.
- Soil can become more enriched by providing nutrients for plant growth. This, of course, is especially beneficial for those who yield crops. Any person interested in growing crops will find that flood plains are especially good at it.
- Groundwater recharge and more species diversity. Areas that frequently suffer the effects of nature like this also get some groundwater recharge and provide a space for more fish diversity. It is to be noted that this is especially beneficial for zones with rivers and lakes.
- Insurance can be expensive, especially if it is a requirement. As explained above, the average annual expense for the NFIP policy is around $700. The premium value will vary depending on the location of the property.
- Insurance policy might not cover 100% of rebuilding costs. For instance, the maximum amount of coverage available through NFIP for residential damage is $250,000. Although this could help alleviate some stress, it might still not be enough to cover all infrastructure damage and content.
- If the damage to a home is severe, occupants must find resources and a place to stay while the house is being rebuilt. There is no doubt that victims of this type of natural disaster get their lives upended. But it does not end there. Next comes the mission to find where to stay while the home is being rebuilt.
- The costs to build in an SFHA will increase. If someone buys land in a flood zone with the intention of building, expenses will be higher. This is mainly because special investments will be required to reinforce the house against disaster.
- Properties in high-risk zones typically lack a basement or an underground parking garage. These are two amenities that many people love and seek for.
- When making claims for insurance money, the process can be longer than usual. This is a process that involves the company to expend more money than usual. Typically, this process will take a longer time.
- Properties in flooding areas lose value. If the plan is to resell a house, this will have to be done at a lesser amount, even if the house has never suffered an event. When it comes to selling, it might take a little longer to unload.
Be Aware of Flood Risk When Obtaining a Property in a Flood Zone
One of the best ways of understanding the risks one is facing when buying in a potentially dangerous area is to compare numbers. The following are some stats to help determine what the options are.
- One inch of floodwaters can represent a cost of $26,807, for a 1000 square foot property, according to Floodsmart.
- Water damage is not the only disaster. There are other complications, such as mold or wet soil, that come from flooding.
- The cost of an insurance policy can be as low as $600 per year. If the property is located in a high-risk area, the cost could add up to $10,000 a year.
During a 30-year mortgage, there is a 25% chance of water disaster in high-risk areas.
- The number 1 natural disaster in the death toll is flash flooding.
- There are more than 85,000 dams in the United States, according to a National Inventory of Dams 2018 inventory. One-third of them pose a tremendous risk if ruptured.
- Not having an insurance policy for these types of events can bring significant financial distress. All the damage would need to be paid for out of pocket. Not a good position, mostly when a disaster has shattered most resources.
- Around 20% of flood-related claims come from low- to moderate-risk areas. Be well informed of the risks on the zone intended to obtain a property.
- If any disaster assistance is available, this will usually come as a loan that needs to be repaid with interests.
- Twenty-seven private insurers provide funds to the NFIP, arranging coverage of $1.33 billion for 2020.
- It is estimated that for 2020, the loss of the NFIP for coverage will be between $4 billion and $6 billion.
Is It a Bad Idea to Buy a House in a Flood Zone?
This will most likely depend on the nature of the venture of obtaining a home. After thoroughly analyzing all the pros and cons described earlier, one can easily see if buying a house in a dangerous area is a good idea. There needs to be a balance between the property’s cost and the amount of risk willing to take.
How Hard is it to Sell a House in a Flood Zone?
There is a lot more to it than one can think. It will all depend on the type of property in question. The risks and the potential costs for damages will ward off many buyers. However, it is not the end of things.
According to FEMA, 13 million people live in the 100-year flood plain. This means that they face a 1% chance of getting flooded any year.
Although it is not a deal-breaker, living in a dangerous zone will make it harder to sell a house.
Do I Need Flood Insurance if my House is on Stilts?
Yes. It is a common misconception to assume that a house lifted on stilts does not require one. While a house in a raised foundation has a premium advantage, it is still located in a hazard area. Therefore, insurance is required. The height of the stilts determines how cheap the insurance is—the higher, the more affordable.
How Can I Get my House Out of a Flood Zone?
The best way to do this is to stay updated on the flood zone designations to see if your house can be re-categorized to a safer status. This will require a thorough study of them over time.
How Often do Flood Zones Change?
The maps created by FEMA must be accurate because they are the official document used by government officials, planners, and developers to establish if it is safe to build. The maps are also a great guide to help get a good real estate deal.
Because of this, these maps must be updated every five years for proper use.
What is Grandfathered Flood Insurance?
It is an NFIP rule that recognizes property owners their rights of building a property before a particular map becomes effective. This also applies if the construction was made with the standards relative to the map that was in effect when building the house.
Does Being in a Flood Zone Affect a Home's Price?
It is imperative to know that the price of a property is affected by its location. Usually, houses located in risky zones will have a relatively lower price than those found in low-risk areas.
To Sum It Up
Before getting a property, it is of utmost importance to consider its location and ask oneself, “do I live in a flood zone?” All things commented in the above article must be taken into consideration. Following the steps will ensure the best decision that will benefit the owner and give them peace of mind.
As explained, a property in a high-risk zone is not a deal-breaker, whereas one in low-risk does not mean 0% chance of inundation. There are financial factors that will help make the choice that makes ends meet.