Sea Level Rise Takes Shine Off Waterfront Homes

Sept. 28--NORFOLK -- Soon after Mary-Carson and Josh Stiff got married last year, they began talking about buying a house.

Josh, 30, wanted to live in Norfolk to be near his law office. Mary-Carson, 28, wasn't so sure. Sea level rise and the chronic flooding that plagues the city worried her.

"My concern was, it might not be a wise place to invest in general," she said.

Her worry was grounded in her work. A consultant at the College of William & Mary Law School'sVirginia Coastal Policy Clinic who now works part time as policy director for the local environmental group Wetlands Watch, Mary-Carson has been immersed in sea level rise policy work for months. She's well-acquainted with the piles of studies, reports and charts that show Norfolk is one of the country's most vulnerable cities.

Her determination to avoid living near the water surprised her a little. She grew up on a lake in Suffolk, a proud, water-loving Tidewater native.

"I absolutely thought my dream home would be on the water," she said. "But knowing what I now know, my entire perception has changed. I think everyone in Hampton Roads has rose-colored glasses when it comes to a picturesque home on the waterfront, with a dock and a boat and a kayak. That life is sweet and has a place in my heart, but it's no longer what I dream about."

The newlyweds forged a compromise. They would search for a home in Norfolk to be near Josh's office. But it could not be in a flood plain, susceptible to rising seas, storm surge and escalating flood insurance prices.

Their decision is one glimpse into the changing dynamics of coastal real estate. A growing awareness of sea level rise and flooding, coupled with rising flood insurance premiums as the federal government phases out subsidies, has the potential to reshape segments of the Hampton Roads market.

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No one, of course, knows exactly what the future holds, but there's consensus on the broad strokes.

Scott Hunter, president of the Virginia Beach insurance company Comparity, which does flood insurance work, said, "I would have to believe it will take longer to sell these properties, and certainly there will be a downward pressure on prices."

For some, like the Stiffs, waterfront property has simply lost its appeal.

"Previously, people looked at the school district or maybe property taxes, but now they're also asking about flood insurance," said Michael McShane, an Old Dominion University professor specializing in risk management and flood insurance. "It's starting to worry people. It has become a new factor."

Committed to living in Norfolk, the Stiffs set out on a mission to find a home they loved away from the threat of water, a surprisingly challenging quest.

Real estate agent Kathy Heaton found herself on the flip side of the growing concern, and perhaps at the forefront of a new trend.

For months, the Nancy Chandler and Associates agent had been trying to sell a home in the desirable Norfolk neighborhood of Larchmont. The problem: Like many homes in that area, it's in a high-risk flood plain. Flood insurance could run up to $3,500 based on estimates she's seen.

That would add almost $300 to a monthly mortgage, an amount many buyers Heaton has encountered would rather put into the cost of a home.

Regular homeowners insurance does not cover flooding. Homes in the flood plains with mortgages are required by lenders to have insurance from the subsidized National Flood Insurance Program. It is struggling financially, and reforms are steadily increasing rates -- about 18 percent a year -- until they represent coverage of the true cost of the risk.

The specter of flood insurance is making the Larchmont home, assessed at around $270,000, nearly impossible to sell.

"We've probably had 35 showings, and everybody has walked out because of the flood insurance," Heaton said.

The home is not unique in a city penetrated by tidal creeks with some of the highest rates of sea level rise in the country, a combination of sinking land and rising water.

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About a quarter of properties in Norfolk -- just over 17,000 -- are in high-risk flood plains, with values totaling 34 percent of the tax base, according to city figures.

The number of homes that repeatedly flood, so-called "repetitive loss" properties, has increased from about 200 in 2002 to almost 900 today, said Lenny Newcomb, the city's zoning administrator.

Owners of these homes might be eligible for federal money to raise them above flood levels, but that money is competitive, and the option is not practical for all homes.

Minor flooding, partly driven by sea level rise, has also been increasing around Norfolk, according to studies published this year by Old Dominion University scientists and the National Oceanic and Atmospheric Administration.

The Larchmont home has been so difficult for Heaton to sell that a creative solution is in the works that could be a model for flood zone homes in the future.

The idea is to make changes to the home to reduce flood damage and drive down insurance rates.

In this case, contractors would move the furnace, hot water heater and electric panel from the basement of the 1920s home into a newly created utility room in the upper part of the house. The basement would then be filled in, and vents would be added to allow floodwater to move in and then out from under the house.

The work would cost about $15,000, said Mike Vernon, director of business development for Flood Mitigation Hampton Roads, a new company that would do the job.

The seller and buyer would figure out how to split the cost, with the buyer's share getting wrapped into the mortgage as a type of renovation loan, he said.

An insurance agent has estimated the improvements would lower flood insurance $392 a year, Heaton said.

"The seller is now armed to negotiate with a buyer in a way that would allow them to move the house," Vernon said.

His prediction for the long term: "The National Flood Insurance Program is going to mitigate America. The houses in the flood plains are either going to be washed away, mitigated, or they're going to be demolished."

Mary-Carson Stiff spent most of the year searching for homes that stayed clear of flood zone dilemmas. It took some work.

"You're basically on your own," she said.

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In Virginia, the burden of discovering potential problems is on the buyer, with a few exceptions. For example, sellers must disclose if a home is in an airplane noise zone or has defective drywall or has ever been used to manufacture meth. But they don't need to disclose if a home is in the flood zone or has been damaged in a flood; flood insurance claims for a home are not available to a potential buyer.

The lack of information has led to deals falling through at the last minute, officials say, as buyers discover they need flood insurance that would dramatically increase mortgage payments.

"The regular homeowner, Joe Blow, might say, 'Hey, I can afford a $1,200 mortgage,' so he negotiates and gets the price down, and then he discovers he's also going to have a $300 a month flood insurance bill, and that pushes the cost over his limit, and he has to walk away," said Matthew Wall, the Virginia Department of Emergency Management's hazard mitigation officer. "It's not good for anyone."

Wall and others have suggested Virginia change its rules so potential buyers are informed early of a home's flood plain status.

A panel advising the General Assembly on sea level rise and flooding issues is recommending that legislators consider requiring sellers to disclose past flood damage. This would require the Assembly to modify the Virginia Residential Property Disclosure Act.

Buyers may be on their own, but there are public resources to help.

For example, the first thing Mary-Carson Stiff did with each home suggested by her real estate agent was plug the address into a city website that includes, among other things, whether a home is in a flood zone. It's called Norfolk Address Information Resource.

"Every single house, I plug into Norfolk AIR," she said. "I don't even look at the pictures because I don't want to be disappointed."

She looked at detailed maps developed by NOAA and Climate Central, a nonprofit that focuses on climate change news, which predict what areas will be covered by water as sea level rises.

Even if the state doesn't change disclosure rules, the private sector might come up with its own solutions.

Real estate agents have no interest in seeing deals fall apart at the last minute, said Terry Gearhart, government affairs chairman of the Hampton Roads Realtors Association and a manager with Rose & Womble Realty Co.

Some are informing buyers early with what's known as a "flooding addendum."

"Every agent understands we're in an era of full disclosure," he said. "It's going to come out at some point. The lender is going to look at it. How anyone would benefit from hiding it, I don't know. The only time we get paid is when something closes."

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Amy Rhodes, HRRA's chairwoman and managing broker at William E. Wood and Associates, said buyers are getting more savvy about living near water:

"They're very cautious, and they're doing their homework upfront."

In late summer, the Stiffs' real estate agent told Mary-Carson about a home in the Colonial Place neighborhood they might want to check out. The flood plain crossed a small part of the parcel, but the home itself was not in it. Expensive flood insurance would not be required. Still, her first instinct was to pass because of the proximity to possible flooding.

But after a long summer of fruitless searching, she agreed to take a look. The view from the porch made her a little nervous. She could see water, a tributary of the Lafayette River called Knitting Mill Creek.

"It was like, 'I see you threatening,' " she recalled.

On the other hand, the 1923 home was elevated on a ridge that put it well above flood level. Plus, they liked it.

"I looked inside, and it was just perfect," she said. "It had everything we wanted."

It was a compromise of sorts. The flood plain was very close, but that's the case in so many parts of Norfolk.

Even though they were not required to have flood insurance, they planned to buy a policy anyway. It will run about $400 year on the low-risk home, she said.

Most real estate and insurance agents, city planners and emergency planners in Hampton Roads agree homeowners should buy flood insurance even if they're not in a flood plain.

"I just wouldn't own a home in Hampton Roads without it," said Dorcas Helfant-Browning, a partner at Coldwell Banker Professional Realtors in Virginia Beach.

The region has the highest percentage of homes outside a flood zone that are potentially uninsured and at risk for storm surge flooding -- 86 percent, or 340,000 -- according to a recent study by CoreLogic, a real estate research firm.

The night before closing on the home, Mary-Carson and Josh Stiff drove to Colonial Place for what they imagined would be a romantic stroll around their new neighborhood. They parked at the house.

It was a short walk. The street running parallel to Knitting Mill Creek, Mayflower Road, was impassable. A lunar high tide mixed with runoff from an earlier rainstorm had flooded it.

They turned around, back toward the high ground of their new life.

Aaron Applegate, 757-222-5122, [email protected]

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