A conspicuous drop in condominium and townhome sales in the Tampa Bay area last month may have been caused by the perception of unaffordable flood insurance rates, if not the reality, real estate agents say.
November broke a long succession of monthly year-over-year growth in condo sales with a 16 percent drop in closed sales in the four-county metro area of Pinellas, Pasco, Hillsborough and Hernando.
Single-family home sales were down about 11 percent.
Some real estate agents downplayed the significance of the change, blaming a normal seasonal slowdown and a slow shift toward a seller's market that may be turning off buyers looking for deals.
Most agree that stories of skyrocketing flood insurance premiums on older properties scared away many buyers.
The problem is the federal flood insurance reforms mostly don't affect condominiums, at least not yet.
“For a lot of people, buying on the water in Florida is psychological,” said Cliff Roe, who runs Roe Realty in Seminole. “I think what it boils down to is everybody is confused about flood insurance and people just aren't buying.”
The 2012 reforms to the National Flood Insurance Program increase premiums on homes built prior to the creation of flood maps in the 1970s that had been receiving rates that were below their actual flood risk.
For owners of single-family homes, the most painful consequence of the new law is a provision that causes rates to increase to the full risk amount when a home is sold.
There have been reports of annual premiums jumping from $1,000 to $10,000, or even $40,000 in unusual cases.
The Federal Emergency Management Agency, which runs the flood program, hasn't made specific plans yet to raise rates on condos and other multifamily homes, though.
The only types of properties that could be affected by future changes under the current law would be older condos in flood prone areas with a first floor below base flood elevation.
Those condos will begin seeing standard rate increases estimated at 15 to 25 percent, which could make a second home buy less appealing for some.
Many condo complexes, particularly at the beach, are built above a parking lot, eliminating their flood risk from FEMA's perspective, Roe said.
Some Pinellas County real estate agents say the negative perception that's been building since many of the rate changes went into effect Oct. 1 may have created the reality of lower sales.
“I think that definitely has had an effect on the market because of the perception in the media that there are problems with flood insurance and all the news about it,” said Jim White, who runs a Century 21 office in Treasure Island.
Many realtors and trade groups in the Tampa Bay area and across the state were sounding the alarm about the rate changes in September and October in an effort to push Congress to stop the law's implementation.
Statewide, November condo sales were down 7.1 percent compared with a 1.2 percent drop for single-family homes.
The decline extended well beyond coastal areas with double-digit losses in the Orlando and Lakeland metro areas, among others.
While far away from the gulf or the ocean, many low-lying inland Florida communities are built around lakes that tend to flood in heavy rain, said David Bennett, president of the Pinellas Realtor Organization.
Bennett prefers to look at the bright side of November's numbers.
In Pinellas, the median sale price for both single-family homes and condos combined was $155,000, an 8.4 percent increase compared with November 2012.
Short sales were down by more than 50 percent and cash sales, usually favored by investors, dropped by 25 percent.
Overall sales from January to November are ahead of the same period last year, Bennett said.
In the coming months, Bennett's organization will work with the Pinellas County Property Appraiser and other county and city officials to collect data that breaks down which particular areas of the county are seeing declines in sales to quantify the effect of the flood insurance reforms.