by David Chapman
Staff Writer
Homebuyers looking to live on the coast have sea breezes and sunrises to look forward to, but they also have hurricanes, property taxes and insurance to worry about.
While desirable, real estate on the coast (and in some cases, even a little inland) can be difficult to sell. Realtors have to jump over different hurdles and selling along the coast presents its own set of challenges. The highest hurdle of them all, one that might need a springboard to get over, is insurance.
“Insurance is the key,” said Kay Seitzinger, former Northeast Florida Association of Realtors president and vice president of Watson Realty’s South Beach office. “It definitely has an effect on the purchase and sale part of contracts.”
Seitzinger has been in the real estate industry since 1984 and believes the affordability and availability of acquiring insurance for potential homeowners will continue to be a problem “from here on out.”
Others agree that insurance is a problem, but are doing what they can to accommodate homebuyers.
“Helping potential homebuyers finding affordable insurance is a task,” said Amanda Dandy, broker-manager of Prudential Network Realty’s Sawgrass office, “but that’s part of our job.”
To some, the reality of the situation is that there is nothing that can be done about it.
“I think there are a lot of contributing factors but the public has no control over any of it,” said Phil Pierce of Prudential Network Realty’s Atlantic office regarding storms and insurance.
Properties east of I-95 are considered higher risk areas with premiums and deductibles skyrocketing past those more inland. The affordability and availability of such policies is one that many in the industry have qualms with, though opinions differ.
“I think there’s a lot of insurance available,” said Shawn Norton of Lifestyles Realtors Jacksonville Beach office. “It’s just the price is going up.”
There’s also another problem with the insurance industry during hurricane season: delays. The official Atlantic hurricane season lasts from June to November and the times when hurricanes form off the Florida coast can be a headache for Realtors. Insurance companies refuse to sign new policies while the risk of landfall is present, leading to delays in contract signings for potential homebuyers who need the insurance. With hurricanes lasting for days and even weeks off the coast, the cost for delays in closing can be felt.
“It definitely has an affect,” said Seitzinger. “But we try to plan and anticipate it accordlingly.”
With a large portion of clientele coming from out of state, the perception of hurricanes is another factor that Realtors must handle.
“One of the biggest aspects,” said Dan McCarthy of Keller Williams Realty, “is the mental aspect for out of town clients. People see the national media and think that Florida and hurricanes are one in the same.”
One tactic some area Realtors use is just the truth, which favors Northeast Florida.
“All you can do is show them the numbers,” said McCarthy. “But hurricanes generally come up first with out-of-towners.”
Those numbers usually amount to the difference of hurricane landfall in Northeast Florida as opposed to areas to the south.
“I show people charts of the hits,” said Dandy. “It’s never a guarantee, but it’s cautious optimism and it’s better than ignoring it.”
Even with the statistics, sometimes the media visuals and idea of a catastrophic storm can scare people away.
“I remember one family from Atlanta was going to look at property in Ponte Vedra,” said Dandy. “They canceled the trip because a storm was on the horizon and they were wary. The storm ended up missing us and hit Atlanta. It goes to show you how unpredictable it really is.”
Older homes along the higher risk coastal areas are even harder to get insured said Seitzinger because of issues with older wiring, plumbing and simply the age of the house predating some of the newer codes since Hurricane Andrew in 1992. The older the home and the closer to the beach, the more substantial the price homeowners will pay in insurance, said Norton.
Condominiums aren’t spared from the insurance problem, either. Homeowners association fees have increased over time, said Norton, because entire complexes have to be covered.
Certain upgrades can help lessen insurance costs. Storm shutters, roof clippings, tie-down structuring and concrete block foundations can help. Some of the upgrades are requirements in new home construction due to updated housing codes, but the savings can still be felt from homeowners of existing homes.
“Every little bit helps,” said Michael Morris, manager of Re/Max Specialists at Jacksonville Beach.
Aside from insurance, the current statewide burning issue of property taxes is another factor when dealing with selling of coastal realty. The prices for coastal properties generally dwarf those of inland properties.
“For higher-end clients,” said Norton, “property taxes is always the first question. ‘How much am I going to pay?’”
Even with a property tax relief statute in place and a potential reform on the way, it can still hamper a deal. Some clients still are taking a wait-and-see approach regarding the issue, Norton added.
“The current property tax situation is a problem, but hopefully not for long,” said Pierce. “The more the governor does the better, so I hope he keeps it up.”
The reform, Pierce believes, would mean that the savings from a property tax “super exemption” could offset rising insurance costs and help potential homebuyers.
On top of insurance and property taxes, the availability of empty lots is a factor for Realtors. Coastal buildup over the years has meant fewer and fewer places to build new homes, limiting some potential homebuyers’ options. Some builders, though, are adhering to a different motto: out with the old, in with the new.
“The frequency of older homes being demolished for new homes has increased over the past few years,” Pierce noted.
Others have noticed changes, but not as drastic.
“I’ve seen more refurbishing and remodeling of older homes,” said Norton, who himself lives in a home near the beach that was built in the 1950s. By remodeling without destroying the frame, money is saved, said Norton.
Regardless of all the different costs, headaches and questions, people still are flocking toward the coast to live.
“If people want to be on the ocean,” said Morrison, “They’re going to be on the ocean.”
Insurance, property taxes, land availability, educated buyers, hurricanes, coding ... all can be hurdles that Realtors face when selling coastal property, but the thought of beach living is enough to keep people coming.
“You have to pay a price to live at the beach,” said Seitzinger, “but people always want to live there.”