As the fragile housing market begins to stabilize, a crucial federal program is in jeopardy, and that could drastically affect recovery efforts. The National Flood Insurance Program is set to expire on September 30 for the tenth time in two years. The program ensures access to affordable flood insurance for more than 5.6 million home and business owners in 21,000 communities nationwide.
"The NFIP is essential to a properly functioning housing market," said Gene Lentz, president of the Silicon Valley Association of REALTORS®. "REALTORS® across the country are urging Congress to reauthorize the program for the long term. Americans deserve access to affordable flood insurance, and the current uncertainty surrounding the program is already hurting many housing markets."
Since September 2008, Congress has approved nine NFIP extensions and allowed five lapses. During the June 2010 lapse, 47,000 home sales were delayed or cancelled, according to National Association of REALTORS® survey data. The Silicon Valley Association of REALTORS® says real estate markets require certainty to encourage the long-term investments that are vital to the U.S. economic recovery.
"Flood disasters claimed more lives and property than any other natural disaster in the U.S. over the past century," said Lentz. "And more recently, from 1990 to 2005 floods were reported in every single state."
Lentz also dispelled the common misconception that the NFIP's current structure benefits coastal states at the expense of non-coastal states. Five of the 12 states with the fewest high flood loss years have coastlines, and data analysis shows that overall, coastal states are paying in more than they are taking out. Lentz said those states perceived to have the highest risks are actually paying their fair share and contributing more than other states. In addition, more than 98 percent of NFIP policies issued are in non-coastal communities.
In addition to a longer term reauthorization, REALTORS® also support reforming NFIP to strengthen participation and put the program on the path to fiscal solvency by adding coverage options for business interruption and living expenses; indexing coverage limits; improving the scientific integrity of the floodplain mapping that determines where flood insurance is required; and streamlining the map appeals process.
"Without this program millions of Americans will be without flood insurance for an uncertain amount of time," said Lentz. "We cannot leave these property owners in the dark and we certainly cannot afford to cause any more damage than has already been done to the housing market. That is why REALTORS® are strongly urging Congress to strengthen and quickly reauthorize the NFIP."
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.