How will the changes in Flood insurance affect the Miami real estate market?

You may have heard the news: flood insurance rates are going up. Will this affect the Miami Real Estate market?

On October 1, 2013 the following changes were announced:

Historically, flood insurance was subsidized by the federal government (used to cost the government about 15 Million and has increased to about 37 Million a year in federal funds), but with recent flooding events and government budget issues, the government will no longer subsidize flood insurance.

New policies will have the higher rates effective immediately.

You should STILL get flood insurance if you are in an “X” zone – 30% of flood insurance claims are in flood zone X










For existing policies, there will be increases of 25% for high risk zones over a 4 or 5 year period and 20% for moderate risk zones until the policy reaches what a new policy would cost according to the flood zone maps.


AE, AH, AB, V & VE are high risk zones – homes in these zones will now start paying the new, higher rate because the federal government will no longer subsidize part of the flood insurance policies in these zones.

Flood zones X, B & C do not require flood insurance.

Click here to check on your Flood Zone in Miami Dade County.

These changes should not affect condos

These changes come as a result of the Biggerts-Waters Reform Act.

The following videos will help you understand the new changes:

Getting to know Flood Reform

Basics of Flood Reform Laws

Do not let your policy lapse or it will automatically go to the new higher rate.

Investment or second homes will go to the new rates immediately.

Number of homes affected by the changes in flood insurance rates in different areas of Miami Dade County area:

Coral Gables 477

Cutler bay 302

Doral 0

El Portal 26

Key Biscayne 2,705

City of Miami 5,561

Miami Beach 22,259

Palmetto bay 150

Pinecrest 72

South Miami 61

West Miami 0

Unincorporated Miami-Dade County 7,572

Source: Florida office of insurance regulation

How will this affect the Real Estate market in Miami, FL?

I believe it will NOT have dramatic impact. However, I do foresee a higher demand for homes NOT located in a flood zone.  For home buyers, for example, the price differential between having an “X” based flood insurance cost vs. an “AE” flood insurance cost can make the difference on whether or not the buyer is approved for a mortgage.  Mortgage lenders REQUIRE that a buyer obtain flood insurance if the property is in a flood zone.  Buyers who qualify “by a hair” may not qualify anymore if they have to have a higher flood insurance rate.

Alternatively, there may be scenarios where a longtime homeowner on a fixed income can no longer afford their home if their flood insurance rate goes up a couple thousand dollars per year.  In instances where homeowners can no longer afford the insurance on their home, we will see some homes in flood zones come on the market for sale this year.

West Miami and Doral should not see an effect from these changes and areas on a ridge, such as Coconut Grove, west of Bayshore Drive should be ok as well. (Refer to link for flood maps above, if in doubt about your flood zone).

These changes will undoubtedly affect the market some, but I do not believe the impact will be dramatic at this time, since there is a very high demand for homes in Miami combined with only a four month inventory AND there is plenty of local and international interest in our market.

I specialize in Miami real estate, in particular Downtown, Brickell, Coconut Grove, South Beach & surrounding areas.  I value technology, communication & your time.  If you would like to meet with me regarding a purchase or sale of Real Estate in Miami, you can contact me on my cell 786-663-4382 or at seeks to keep the public informed about Miami real estate market trends, new development projects, neighborhood information and, of course, great homes and condos for sale in Miami!







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