The US government is buying up and then destroying
American homes like this one.
Some homeowners in floodplains may voluntarily
sell their doomed properties to the
government.
Since 1989, FEMA has funded something on the order of 45
to 50,000 home buyouts.
Fema is estimated to have spent somewhere around $4
billion on the project so far.
But that's just a fraction of the total amount spent on
buyouts. Since there are programs outside of FEMA,
but not everyone is convinced buyouts are a good
idea.
It's a bit of a mixed bag.
I think in some cases they're successful, and in
some cases they're not.
Any person that is moved out of harm's way is a positive
move forward, provided that they're given appropriate
resources to move and to start their lives anew
somewhere else.
Because there's so much variation, sometimes buyouts
are heartbreaking and sometimes they're a
celebration.
Kinda tugs at my heart a little bit.
I was there for 17 years.
I'm like, they're going to tear this house that I was
living in down.
I miss the neighborhood, but I'm happy in this
location. It's not in a flood zone.
Buying up homes and demolishing them seems
pretty counterintuitive to solving the housing crisis.
The US is still short, up to 7.2 million homes.
We're talking about a crisis of affordability in housing
across the country, combined with the crisis of
the climate change effects, how do we ensure that we
provide for our population while making sure that
they're not in harm's way?
So do floodplain buyouts help or hurt American
homeowners, and can the US afford to bail out
communities?
The general way that floodplain buyouts work is
that a disaster occurs.
There's damage done to people's homes, the
community, the local government.
They decide that it might make sense to offer buyouts
to residents in those damaged areas.
Most often, the local government and the state
then request funding from the federal government.
They receive the funding.
They make an offer to purchase a home from someone
who has a damaged home.
That homeowner decides whether or not to sell.
If they sell, they relocate somewhere else.
The government owns the property, they demolish the
home and create open space, and there are almost
infinite variations at every single one of those
stages I just described.
But that's the really general process.
These homes are often located in the floodplain,
or in an area that is deemed likely to flood.
One of the most successful buyout programs has been in
The area near Charlotte, North Carolina,
where there's almost 20,000 acres of floodplain.
Over 475 homes have been purchased since 1999,
relocating over 785 families and businesses
outside of the floodplain.
My name is Andrea Jones.
I'm 59 years old and I work for a bank, so I've been in
the banking industry for 36 years now, and I moved here
to start that job and I stayed, didn't have a reason
to to move back to South Carolina until now.
I moved with the buyout program in May of 2023.
So ten months now, 11 months now, I do consider
myself a member of the Charlotte-Mecklenburg
community because I still work there, and that's where
I do the majority of my shopping.
My doctors are still there.
Um, I didn't move any of that because I'm not that
far away. So I am still a member of the community.
I just don't live there anymore.
The county says $90.5 million have been invested
from federal, state, local and other sources and claims
it has avoided $40.9 million in losses.
Some of the largest programs that support
floodplain buyouts are FEMA's Hazard Mitigation
Grant and three programs from the US Department of
Housing and Urban Development, or HUD.
They all come with different requirements and different
provisions.
For example, from FEMA, the flood buyouts tend to occur
for severe repetitive loss properties.
So places that have gone through several floods.
For HUD for example, if a state chooses after a
disaster to use its funds to allow for buyouts, then
those homes that went through the flood are
eligible.
On average, federal buyouts can take 2 to 5 years,
though 80% of FEMA acquisitions are approved in
less than two years.
And that's a long time to wait. If your home has mud
in it and you're trying to figure out whether to
rebuild or not.
And it usually is predicated on which program is funding
the buyout.
Some buyouts have happened in as little as 3 or 4
months, especially when the funding comes from the state
or local level instead of the federal.
It was a letter sent through the mail, and it was sent to
all of the homeowners on the street.
Within three years of me being in the house was the
first time I experienced the heavy flooding.
It came up to my mailbox.
You could not see the street.
You could not see the beginning of my driveway.
A couple of years later, the street flooded again
because of the pandemic.
Finally got everything completed in December of
2022, um signed my contract for them to purchase my
house in January of 2023, and then we had to start the
appraisal process.
Once they did the appraisal, I did a second
appraisal. They allow you to get your own.
The one thing I didn't like about that was my appraisal
had to include the flood zone.
And I thought because my house was not in a flood
zone when I purchased it, that I didn't have to do
that. But they said, yes, I do.
Once I found a home, the process was easy.
I told them when I could move and we scheduled the
closing. So the home that I was in, we closed on the
Thursday and then I closed on this home the very next
day.
Andrea said some of her neighbors took the buyout,
but others didn't, especially those who didn't
have a mortgage.
The estimates of homes in the United States who are at
risk of being flooded ranges from somewhere to
between 4 and 41 million by 2100.
That's a big margin of error. But regardless, if
we've spent the last 30 years buying out 45 to
50,000 homes, and in the next 80 years we need to do
4 million, we're nowhere near the scale that would be
required.
The FEMA grants are funded through a cost share, where
the federal government provides 75% of the money,
and the remaining 25% comes from a different agency, the
state or local government, or the homeowner.
In some instances, the 2021 bipartisan infrastructure
law can cover 90% of the buyout with federal funds.
The non-federal funds are generated straight from the
tax revenue or,
Income tax revenue. Sometimes they're coming
from a sales tax.
There's a couple communities who put in a
sales tax specifically for this issue.
Sometimes it's a bond measure, sometimes it's
volunteering, volunteering the fire department's time,
for example, to demolish some of these bought out
homes or it's other voluntary donations in kind
of time or services or others that are meeting
those requirements.
Some communities may not have the funds to support
their part of a plan like this, and worry the buyouts
could chip away at their already stretched taxbase.
Downe Township's mayor says without its bayside
sections, the rural communities already small
tax base, would be decimated.
We're not going have any ratables or revenue left,
and I don't see anything else except bankruptcy.
We're a hurting community in terms of we are built out.
We're two square miles, and every home we knock down, we
lose the tax revenues and there's nothing to replace
it. Individual homeowners may also be concerned about
how much money they'll be able to make in the sale.
The water was up to here.
The idea is that the government will buy the home
for the same value that someone could have sold
their home on the private market for a private sale,
But that doesn't mean every homeowner will be happy with
their buyout offer.
Right now. The way the market is, it wouldn't be,
you know, it wouldn't be to our advantage.
How much would you lose?
At least $100,000.
It's not just our home, it's our entire life.
It's everything that we've worked for and built up to
this point that we're gambling with.
Typically going to run into a situation in which the
value of the buyout offer is not going to match what
it's reasonably going to cost for the recipient to
relocate to a higher, drier, safer location
outside of the floodplain.
That could be because the average cost of a house in
the US has jumped 3.5% from 2022 to 2023.
The house originally sold for $135,000.
That was back in 2006.
The, uh appraised value was 325,000.
So we paid off my the remainder of my mortgage.
The new home was 437,000.
Obviously, um, values, home values gone up.
Um, I did buy a nicer home than what I was in.
If I'm going to move, I need to get what I want.
This house is three bedrooms, two baths as well,
but there's also a half bath.
Even though I put a good bit of money down on this
house, my mortgage still doubled.
I had a 3.62 mortgage interest rate.
Um, it went up more than two points.
I have a 5.99% interest rate now.
And then the amount of the house, it was $206,000 for
the mortgage, whereas when I originally bought the
other house was 135.
The actual execution of the buyout work is done by the
state or local government.
And so those local governments can make lots of
decisions that are appropriate for their
context. How many homes they want to make offers to,
how much additional assistance they want to make
to help people relocate afterwards, how they use the
land after it's purchased, and on and on.
Larger buyout programs can offer additional incentives
for the homeowner. For example, the Blue Acres
program in new Jersey is able to negotiate lower
mortgage rates for buyout recipients when they look to
relocate. If a homeowner still holds a mortgage, the
balance will be paid off to the bank directly.
The land is then deeded to the local government with
restrictions on how it can be used.
You can't go in and redevelop. There's a few
very, very small exceptions, like if you made
a community garden or a park, you can put a
restroom, but that's basically it.
That's that's the level of reconstruction you could do.
Ideally, the land is maintained as some sort of
public benefit, like a park or a swale, which is a
depression in the land that can collect flood waters to
protect the other homes in the neighborhood.
Some municipalities even create wildlife corridors.
Others won't have the funds to maintain or transform the
land, and it simply remains a vacant lot.
I drove by and took a picture of the empty lot.
There's legal liability associated with owning
property generally, and so it ends up in some cases,
being a fairly significant drain on local resources.
That's why oftentimes, you know, localities are not all
that keen on buyout activities because they end
up with a burden.
Not all homeowners in the floodplain are eligible for
a buyout, and not all who are eligible will accept the
buyout offer.
You at times end up with a development pattern that is
called checkerboarding.
Um, and this checkerboarding effect
references sort of a patchwork of homes, some of
which have accepted a buyout, some of which
haven't. The current policy movement around buyouts is
to try to eliminate that situation to the degree
possible.
Checkerboarding can create problems like blight,
community fragmentation, difficulty with municipal
services, and an inability to restore the floodplain to
be able to properly absorb water.
And then there are things that savvy buyout
administrators can do about bundling homes.
So maybe you have a home that is a clear win, and
their next door neighbor is slightly less of a clear
win. But if you bought the two of them together, you
could make a much better community garden or a park.
So in aggregate, it makes sense to buy both of them,
even though one of them is sort of marginally good and
the other one is great. As a homeowner, you don't go to
FEMA and say, I want a buyout or to HUD and say, I
want a buyout. You go to your local government, they
turn around and talk to the state. The state then
applies to these federal governments. So in terms of
which program you're under, it's whichever one your
local government got funding from.
And that means that the best way for a homeowner to
find out is to talk to your local official about those
details.
The buyouts are meant to keep flood prone homes off
the market, and can help protect new buyers from
making a bad investment.
You know, in many places across the country, we don't
have strong flood risk disclosure laws.
And so in many cases, homeowners don't know the
flood risk that they're moving into.
And ultimately, you know, the developer can build a
development, sell the homes, and kind of move on
without maintaining any of the liability associated
with the homes that have been built in a flood prone
area.
New Jersey and New York both just passed laws recently to
increase flood risk awareness. Right.
Maybe that's another piece of this.
The number of people who buy homes in states where
you are not required to disclose that the home is at
flood risk. Now, you can make an argument if your
home is on River drive next to the Ocean, maybe you
should know that it's at risk. But many homes are
three roads back and might not know, right?
Or they think they're up on a hill high enough and they
don't know that they're at that risk.
Companies like Realtor.com now show a home's flood risk
directly on the property's listing.
But critics question if the US should be bailing out
people who made bad investments.
I think it is very tempting to say people made bad
decisions. They should deal the consequences of them.
But that presupposes that we actually have choice.
Maybe they bought the home in the 1970s, when sea level
rise was lower, when storms were not as frequent, when
rainfall was less prevalent, they made it
under a totally different risk assumption than they
are today.
For me, had I known that they were going to move the
flood zone, or if I'd known that the street flooded the
way it did when I moved in, I wouldn't have done it.
And then you have the residents where you think
about the low income homeowners.
Yeah. There's an estimate that maybe 10% of government
subsidized affordable housing in the US is in the
floodplain. And you think about people who are on
government subsidized affordable housing.
They don't have a lot of options about where they
live. So to say that they chose to live in the
floodplain isn't isn't really true.
And many of these residents could end up using flood
insurance from the National Flood Insurance Program, a
federally administered option for risky locations
where private insurers are reducing coverage.
It makes sense for the federal and state and local
governments to be investing in buyouts, mainly because
they may be on the hook for some of the expenses that
may be associated with it.
So it makes more sense as taxpayers, to get rid of a
house from the National Flood Insurance Program.
Take it off the insurance rolls, because we own the
National Flood Insurance Program as taxpayers.
At the end of 2022, the NFIP was $20.5 billion in debt
because it could not fully pay back debts it incurred
paying out claims for catastrophic flood disasters
after Hurricane Katrina.
We have the federal purse strings that have paid for
so many of these buyout programs and have encouraged
buyouts in certain harm's way, but we don't have.
So we have all these carrots, but we don't have
the sticks. We're not telling people because we
can't at the federal level, tell local jurisdictions
don't build here, don't allow development here.
Move all of these people in this community to other
parts of your community.
We need to have more of those sticks, to be quite
honest, to make sure that we're reducing the number of
people in harm's way.
I think in most cases when there is a catastrophic
flood sort of day, one after that flood is when
you're going to have the most support for a
larger-scale buyout activity.
And then as time goes on and people begin to rebuild
their homes and move back in, that support can begin
to wane over time.
And as more time passes following a significant
flood, it becomes easier to rationalize the idea that,
well, you know, maybe this was a, you know, a 1 in 1000
year type of flood and is not likely to happen again.
Um, but that's a that's a difficult train of logic to
follow, given how often we're having significant
flooding events in the United States.
And at some point you're just displacing people out
of the community. And then that causes all kinds of
other social issues, people being displaced.
You disrupt the economy, you disrupt the social
fabric. And that's where it probably is worth the buyout
to get people out of that terrible game of hot potato,
of who's left holding that home when it loses its
value, or when it gets that worst storm.
There is a little, um, liberation in it.
I do feel that.
But when I drive by the other neighborhood, I do
have a sense of, oh, I miss it.
I miss the neighborhood, I miss my friends.
I miss seeing people walking their dogs, standing
out, talking with them, having conversations and
things like that. But I wouldn't.
I wouldn't change my mind.
I wouldn't go back.
I have no regrets from having made the decision
that I made. I would do it again.