We all have too short memories when it comes to natural disasters. Hurricanes, slashing rains and winds, rising flood and coastal waters recently devastated the entire eastern seaboard, Louisiana, Kentucky, Mississippi, Texas and more but we continue to do the “same ole” thing.
Let’s look just to New York this post to see what, if anything, is being done differently when it comes to living, working and building on or adjacent to water. Similar posts can be written about what’s happening in Boston or Miami or Houston or wherever. If any reader has some sort of breakthrough project or idea to share about impacts of water on real estate housing, please share.
Hurricane Sandy smashed through Brooklyn and Sheep Head Bay with 10 feet of water in 2012. In 2018, one in eight residential units are being built along New York’s riskiest waterfronts.
According to Localize.city using data from the Department of Buildings, 12.4% of the residential units to be built in Queens and Brooklyn are located in high flood risk zones. 33% of 45 projects and 15,171 units in Brighton Beach, Coney Island and Gravesend are being built in high flood risk zones.
Simultaneously, since Hurricane Sandy, New York is desperate to find more places for people to live due to both price increases from $732,700 in 2012 to $1.1M in 2016 AND population increases of 90%, from 3,979 households in 2010 to 7,553 households in 2016 along the bay.
In Rockaway’s flood zone between 2013-2017, gross real estate sales increased by 167% from $147M to $397M, according to Localize.city,
There are a few “same ole” exceptions, however. Some of the units being constructed are building lobbies above flood planes; some mechanical systems are being built above ground to prevent power and heating malfunctions if/when flooding occurs; and some projects are creating new drainage plans and systems to account for added stress on sewage systems. And some buildings that “must” be elevated 3’ above sidewalks are being built 3’ above sidewalks.
But, building in high-risk flood planes translates into higher building costs. In turn,those higher building costs translate, in most cases, to higher prices for buyers. Additionally, flood insurance is mandated for owners with mortgages in high risk zones. And that mandated flood insurance now requires that owners pay for +$5M of additional coverage beyond the formerly standard $500,000.
Federal subsidies and grandfathered in status for flood insurance are being phased out for older homes. Many low-income neighborhoods are affected here. Some owners’ rates could go from $400/year to $4,000/year.
“In effect,” said Jonathan Miller, a NY real estate appraiser, “this is gentrification by water.”