Community and Why It Matters

For the past several weeks, I’ve been focusing my Facebook posts on our real estate company fan page on two topics: local businesses and the horrible impact of the Biggert-Waters Flood Law. They may not appear to be directly related, but they are. Both deal with community. Communities are, or should be, more than the places where we live and do business. They should be a place where we take pride in our surroundings, where we should enjoy living and doing business. They should be a place where we support each other. Because I grew up in a family which ran a real estate company, I was taught from a young age to take pride in my town, and to support local businesses. My Mom used to say: “Spend your money where you make your money.” As a local business owner, I try very hard to do that. I also try to support local projects, meaning everything from cheerleaders to ball teams. It is sometimes annoying to be have people who use real estate agents from out of town then turn around and ask us for support. I always want to lecture them on the connection–if I don’t make money here, I can’t spread it back around here. But overall, our community is supportive of local businesses. So, before Christmas, I tried to highlight all the small businesses in my little town and give my readers information about local shopping. Then, there is Biggert-Waters. My little town of Jersey Shore PA (nowhere NEAR New Jersey–actually on the West Branch of the Susquehanna River), is a classic “river town”. It was built around the early trades in Pennsylvania–trapping and lumber. There were no roads; the river was the road. Half of my town is in the flood plain. Biggert-Waters has effectively made half my town unsaleable. Flood insurance premiums have gone from $800 to $1000 a year, on the modestly priced homes in the flood, which are $80,000 to $110,000 to $7000 to $10,000 a year. This is unaffordable to those buyers who would buy those homes. It also “sticks” many older residents with unsaleable homes. They can’t sell the older two story home and move to a smaller, one story home–there is no market for their homes. Some see this as a problem only for those in the flood plain. That’s very shortsighted. A devastating economic event in one part of a real estate market ripples through the entire market. Already, in our area, homeowners are stating they cannot afford the premiums and they will be walking away from their mortgages. The lenders then will be stuck with this virtually unsaleable homes. However, if you understand economics and real estate, you know nothing is truly unsaleable–at the right price. The prices will fall to a level where cash investors will buy them, then turn them into rentals, hoping to recoup their purchase price before the next flood. These investors will NOT carry flood insurance, because it is too costly. That will shrink the pool of those carrying flood insurance, making a bad problem even worse. The next step is that these investors will appeal their tax assessments, and succeed. This means the taxing bodies will have to raise taxes elsewhere to meet their budgets. Those of you out of the flood plain–brace yourselves for a tax increase. This could have been avoided if some thought had been put into the law, or if the affordability study called for in the law had been completed. One idea which appears to have merit is putting a “catastrophe” amount on every homeowner’s policy in the US–for catastrophes–floods, forest fires, earthquakes, tornadoes, hurricanes, mud slides, volcanoes. Then, instead of having only flood prone properties in the pool, you’d have a larger pool–with a much larger base. Communities also pull together to solve their common problems. The last major flood my community had was in 1972. The entire town pulled together to recover and rebuild. Communities need to stick together, because we are all in this together. Community is loving your town, supporting its businesses, and pulling together when there is a problem.