Flooding in Midwest Could Have Lasting Impact
Heavy rains and rapid snowmelt following last week’s “bomb cyclone” have caused severe flooding throughout the Midwest including Nebraska, Iowa, Missouri, and others. The flooding has already impacted over 8 million people in 14 states and could damage farmland from Nebraska to Iowa to Illinois down to Louisiana. National Weather Service meteorologists predict the flooding could last into the Spring, causing substantial damage to homes throughout the region.
In a region already facing a shortage of available housing, the Midwest is likely to see long-term pressure on its real estate markets. Homes damaged by a national disaster, like a hurricane or flood, lose value and homes not touched by flooding see rapid appreciation in value. The rental market will likely also be constrained, as displaced residents seek temporary housing while their homes are repaired. Homeowners who choose to stay and rebuild their homes will have to simultaneously pay their mortgage, property taxes, and repair costs and the cost of renting temporary housing. Properties impacted by flooding may also face consequences if or when the homeowner chooses to sell. Randall Bell, real estate appraiser who runs the Landmark Research Group, told Realtor.com, “there’s no question that property with a flooding history can be looked at negatively. Buyers don’t want to pay full value with this flood risk.”
Homes damaged by extreme flooding can cost over $100,000 to repair. Many standard homeowner’s insurance policies do not cover flooding and require a separate addendum for flood protection. The Federal Emergency Management Agency (FEMA) will distribute funds in some federally declared disaster areas, but these disbursements may take a long time, depending on the number of citizens affected.
Unfortunately, the flooding is expected to get worse in recent weeks. As temperatures climb in North Dakota, Fargo Mayor Tim Mahoney has preemptively declared a state of emergency asking residents to fill 1 million sandbags to prepare. Rapid snowmelt can overwhelm rivers and cause overflowing that leads to extreme flooding.
If you are buying a home in a flood zone or if your current home is located in a flood zone, review your policy with your insurance agent. Opting for extra coverage now may protect you in the future.
Sources: Realtor.com, Scientific American, USA Today