Flood zone properties see lower prices and fewer sales

On Behalf of | Oct 25, 2023 | Real estate law, Real estate litigation |

Unless they see it as part of their daily routine, New Yorkers tend to forget that the city is surrounded by water. If this is the case, blunt reminders often occur when extreme weather events like hurricanes or record rainfalls flood streets, subways and garden-level spaces.

Now, extreme weather is a growing concern that impacts property sales in a flood zone—according to a new report from Property Shark, properties in flood zones sold less often and at a lower price in 2023 than in 2012, which happens to be the year of Hurricane Sandy. According to the report, property sales in flood zone areas comprised 11% of all New York deals before Sandy, which dropped to 9% after Sandy.

A map of the city’s flood zones generally highlights the coastline and inlets around the boroughs. Still, other notable low-lying areas also appear: Tribeca and Canal Street area, the southern tip of Manhattan, East Village, Upper East Side, Green Point, Williamsburg, East Williamsburg, Howard Beach and Red Hook.

Brooklyn sees the biggest disparity

Brooklyn saw the largest difference in prices. Prices for apartments jumped 74% to an average of $800,000 in those 11 years, while comparable spaces in flood zones (in such neighborhoods as Greenpoint, Williamsburg, and East Williamsburg) jumped a mere 16% to $610,000 in designated flood zones. The pre-Sandy sales in Brooklyn were 17% of sales, but that number dropped to 11% after Sandy.

Risk-averse home buyers and property investors lived through flooding in the past and understand that global warming is a growing problem that increases the severity of storms. It’s not a matter of “if” but “when” flooding occurs. With that in mind, owners and buyers need to understand that flooding is not just a significant inconvenience for residents and businesses; water damage and mold can lead to severe damage with expensive fixes.

Planning for it

Not everyone is afraid to live in a flood zone. For instance, Red Hook prices increased by 279% in the last 11 years. Those who do invest in flood zone area properties can also explore options for minimizing the damage (moving mechanicals out of basements or employing flood prevention measures into the construction). Getting flood insurance is an obvious choice for owners or renters, and lenders likely require it. Flood insurance is also required for those who previously received federal disaster assistance for flood damage.

Addressing these matters

A lower price can be appealing to buyers who are not risk-averse. Those interested in buying property in New York City should do their due diligence by asking the seller (they are obligated to say if there is a history of flooding) and check maps to see if the property is in a high-risk area.

If flood issues arise, it also may be a legal matter. Buildings or owners can take issue with ineffective work or design meant to mitigate flooding issues with the property. They may also file a claim against a previous owner who mischaracterized past flooding issues.

Those with questions or concerns can consult with a knowledgeable team of real estate industry legal professionals. They can help clients determine the most effective course of action for addressing a dispute or issue.