3. Knowing whether a home is "good" is actually a technically-skilled area and most people don't have the skill.
I know someone who lucked out because his wife was the daughter of a man whose whole family worked construction (including him), and she paid attention. When they went to buy their first home, he saw no issues with most of the properties, while she could see "Foundation's cracked here, that smell is untreated basement flooding... See back here where this retaining wall was built? Where do you figure the water goes after it hits that wall? That's a nice little creek behind this house; it's a shame you can see from the silt pattern that it's been walking south for awhile as that hill rolls down and will be under this house's foundation in five years."
In some sense it will, but it will do so in a discontinuous manner going from affordable to not affordable overnight while most people who say this think it will do it smoothly and gradually over time lol. We are seeing this now with fire insurance in many areas.
Interesting. The disclosures that I received in California were highly detailed. That was part of the problem: no one wants to give you an executive summary. Also there seemed like nearly every place had some risk level. So it was hard to judge.
Same here in Texas, on an otherwise uninteresting purchase. All sorts of disclosures of things that are almost inconsequential. I'd have to pull up my documents but it was stuff like "In 1993, 3 boards were replaced by X after Y happens".
A former boss of mine said that when he bought a house in Nevada they had him sign a notice acknowledging that gambling was legal in the state he was purchasing a house in.
Even if laws require disclosure, you have to define what authoritative source defines the risk for a given property.
If that source lags behind reality, or fails to give a picture of future trends, people still get caught unaware.
Isn't this fundamentally the role of insurance? They have the incentive to look forward and anticipate risk, and if flood insurance is particularly expensive or just plain unavailable on a given property, you should look at why.
Is there a generic form like "Give me insurance quotes for every possible type of coverage" that a prospective homebuyer could fill out and submit to a few different insurers, to get a picture of such red flags?
It most definitely does not cover flood or rising water. Insuring against flood is a money loser which is why it needs to be subsidized by the government.
Insuring against floods in certain areas is a money loser. But those areas have a lot of valuable voters who can determine elections, so the politicians that cater to them by providing them taxpayer subsidies win the elections, hence taxpayer subsidized flood insurance.
Perhaps developers should have to bond new housing against floods prior to construction. Fully funded, third party bonds. Sensible locations will more or less be free.
Private flood insurance could certainly be profitable, given high enough premiums.
The obstacle to a functional flood insurance market are all the people who can't afford market premiums, who have complained to their politicians, demanding that the rest of society subsidize their property risk.
The reason why it’s not possible is that property/casualty insurance ordinarily spreads risk across a broad base whose risk is mostly indistinguishable from one another, and where the likelihood of claim is relatively low. The problem is that once you look at a flood plain map it’s easy to see whether you need flood insurance or not. And if the only people who buy the insurance are the highest risks, it makes little sense to sell it.
I disagree. Insurance -- all insurance, even high risk pools -- is fundamentally a numbers game. If the premiums are high enough, then it can be profitable; if it is unprofitable, then the premiums aren't high enough.
Around me a basically large area that flooded yearly was somehow magically rezoned, developed all the houses sold and then boom a few years later.. guess what guys... 'we're soorry'
Most home buyers waive inspection contingencies. The market is one big fomo frenzy for the past decade when fed artificially suppressed interest rates below inflation. I bet home buyers would happily ignore reading any pamphlet explaining their risks related to natural disasters.
Outside of the Bay Area, and maybe a few other especially hot real estate markets, I’m sure that isn’t true.
I’m in the process of buying a home in Washington and my agent says she’s never had a client waive the inspection contingency unless they’re buying a cheap fixer-upper to flip.
I’ve participated (as a bystander, thank goodness) in some recent home offers in Washington where all contingencies (including inspection and financing) were expected to be waived if you wanted to win the bid. These were neither cheap nor fixer-uppers, but they were in central Seattle.
Edit: Also, the expectation was auto-escalating offers, eBay style. The owner set a date to take offers and picked the best one.
There is no way I'd buy anything rural without extensive inspection of well and septic, foundation, property, etc.
In the last 15 years I've purchased in both Toronto and in rural Ontario with the full set of conditions; financing, inspection, etc. As a buyer I simply won't do it otherwise. We have a 6 acre hobby farm near Hamilton.
But I also just don't bother to go look at properties with language in the text like "Accepting offers on...". We won't play the multiple offers game. In Toronto maybe this is the only way to get a home, but we were able to avoid it there back in 2005 by just hunting in areas that weren't "cool."
My experience is there's always almost other places that come up, where the seller has more scruples.
We might sell our hobby farm soon. I would fully expect any potential buyer to demand inspection.
This was definitely the case a few years ago in Seattle. The understanding was that homes would be on the market for a week and any inspections prior to waived-contingency bids would happen during that week. Everyone knew the offers were all as-is.
Aside from the stress of weekly rushes to view, inspect, bid, and bid-up, the process primarily compressed the entire process into a short period of time. The biggest inefficiency was that essentially all buyers were forced to become journeyman experts at the compressed-time process.
It is a frustrating experience. My market is starting to develop into this, in large part because of Seattle buyers flooding inland. That said, it is better than some of the alternatives. There are other highly-competitive markets where houses just never come on the market - instead they get sold in pocket listings and the only way to buy a house is to canvas a neighborhood or be in tight with an agent who is farming neighborhoods. It's ideal if houses actually come to market, the market can decide the value, and it's supply / demand that is making it possible for houses to be sold on such a short time-table. It's a better dynamic all around though than having houses sit, potentially vacant, for months and months and/or increasing the challenges where buyers want to move and may even have a house under offer but can't get their current house sold. Liquidity in the housing market is ultimately a good thing for buyers and sellers.
Agreed. Liquidity is good. The pocket listings may not be optimizing price for the seller, though they may minimize hassle.
It seems like it is healthiest for homes to be on the market for about two weeks. Part of the trouble with short-duration listings is that it is a high-stakes version of the optimal-stopping problem. I think a little more holistic visibility into the market's offerings might yield better matches between buyers and homes.
Choosing an abode for the next few decades amidst weekly auto-escalation bidding wars just doesn't seem healthy for the future dwellers.
Buying in a developed city in the U.S. has historically been a different set of concerns than buying rural. One could generally assume that the environment is managed by the city and state, so that floods would not reach your home and wildfires would be stopped at the city limits; insurance was for accidents and freak events (hailstorms, quakes, electrical fires). Due to both developmental sprawl and the decay of state and federal infrastructure, one can no longer assume a home is in such a controlled environment so, buyers (and insurers!) have some lessons to learn.
A good example of the kind of change I’m talking about is development in 100-year flood plains in Houston[0]. 30 years ago, a naive home buyer would not have had to worry about it, because flood plains were off limits. What changed? Greedy developers? Ignorant planners? More population? Perhaps all of it. But now you have to be educated to make the right call.
30 years ago, building in flood plains had been an established routine for decades in Texas, and all over the United States.
Using Houston as an example, 50 to 100 years ago it was the norm to bring in fill dirt from other regions, flatten and grade a piece of land, and construct a gridded residential neighborhood with total disregard for natural drainage. Flooding was dealt with by artificially channelizing bayous and streams, which is why Houston's urban waterways look so unnatural. Many of these older neighborhoods along the gulf coast were unsustainable and are not being rebuilt after hurricanes.
Starting around 30 years ago, local, state and federal policymakers started to get a clue. Neighborhoods were more commonly build to accomodate the drainage patterns -- this is why developments from the 1990's, 2000's tend to have large retention ponds, (example: https://www.google.com/maps/@29.5517845,-95.4295706,3a,75y,2... )
Real estate agent here, can confirm inspection contingencies are very much so a market and individual house decision. I'd also say it depends a lot on the buyer. For example - first time buyer, I'd always encourage them to do an inspection as they are going to learn a lot about being a homeowner from the experience. Someone who has a number of investment properties and knows houses inside and out? They might be able to get all the info they need with just a walk-through.
As I understand it, in competitive urban markets it has become common for sellers to do a pre-inspection and then sell / provide that info for interested parties. This potentially makes for a faster sale and may create a more competitive situation if more potential buyers see less risk in the condition of the house and are willing to make an offer. But, at least in my state, anything a seller learns about the condition of their home must be disclosed so this could also backfire.
Any time you can remove a contingency in a competitive situation it will be a potential advantage, but caveat emptor all day long - sellers seldom have a complete understanding of their home and property so it is to the buyer's best interest to do everything they can to inform themselves before completing the purchase.
We lost a bid on at least one house in Washington, DC, back about 2004 because we had an inspection contingency and another party didn't. Maybe we'd have lost it on an escalation clause the way things were back then.
Most inspections are "pay us <stupid_number> to point out the obvious and we don't include <list of anything that requires more than just walking around the house eyeballing things to determine> and our liability limited to <price of inspection>". It's no surprise people wave them.
Maybe that's your experience if you go with your Realtor's "suggested" inspector. Again, most home buyers probably just go this route since no one really cares about quality any more.
I researched my own inspector and chose a very technical retired engineer. He identified significant issues with the home that resulted in the price being reduced by 15%. You're an idiot if you waive inspections.
Home inspections are a well known "easy money and no risk" side gig for general contractors in my area. They're all crap but I guess if you need someone to point out what's gonna need work in the next 2-20yr it's better than nothing.
I don't need a home inspector. Short of catastrophic fire or flood there's nothing about a home I wouldn't just fix myself. The problem is the people who need someone to inspect the home for them don't know how to find a good inspector.
The home inspector I use gives me a booklet that is often hundreds of pages long and includes photos and detailed descriptions of every problem found as well as recommended remedies and ongoing maintenance requirements.
I've never needed to call anyone else so I just assumed they were all like this.
Economists define the natural interest rate as "the interest rate that supports the economy at full employment/maximum output while keeping inflation constant"[wikipedia]
For the last decade we've seen very little time at full employment and absolutely no accelerating inflation by any standard measure. So by any textbook definition of a natural interest rate we've been keeping interest rates too high.
You're an idiot if you haven't realized the relationship between QE and US treasury interest rates across the curve. You're an even bigger idiot if you don't understand the relationship between UST interest rates and every other interest rate.
I think the issue is a little more interesting than the popular diatribe.
Agreed interest rates are at an all time low. At the same time, the supply of loans is at an all time high, thanks to new (old) mechanisms like loan securitization being thoroughly commoditized.
Discuss - why shouldn't the price of loans (interest rates) be subject to the laws of supply and demand just like everything else?
A $1,000 1 yr bond is a promise to a $1,000 in 1 year. If you'd pay $500 for it than the interest rate is 100%. If you bid it up to $750 than interest rates drop to 33%.
If the Fed comes along and buys loans from the Banking system it increases the supply of loans... (banks are restricted by Basel Capital regulation in the supply of loans they can provide, otherwise too much liability money creation.)
If they buy loans from anybody else - since the Fed creates money to do so (by virtue of also being a bank), they again potentially increase the supply of loans, if the lenders then relend the money.
And the total quantity of debt goes up, its price goes down, and everybody wonders why.
In the hot markets (e.g. bay area), homes already have an inspection done and all potential buyers are able to look at the inspection report. In that case waiving inspection contingencies is not as wild/crazy as it sounds.
If you've ever gone through the process of buying a home in CA you'll see there are already hundreds of pages of "disclosures." Stuff like "if you get a loan you have to repay it" and "sometimes housing prices go down." Im not sure who this is helping. The whole process is certainly larded up enough that there is zero chance any additional disclosures will be noticed.
Exactly. When you have "ultra important warnings" for everything, it becomes that much harder to know what you should really care about. Hence the phenomenon of alarm fatigue (or the "boy who cried wolf"):
Leaking underground fuel storage near you and stuff like that. Honestly, it's a million dollars. Before I put in an offer, I'd just read the hundred pages.
Where I live sellers have to disclose underground furnace oil tanks that they know of. We don’t get hundreds of pages of disclosures, maybe 10 pages of documentation such as zoning and covenants and surveys and seller disclosure form.
Well, obviously it's superior if you have an executive summary. This thread's context is:
* CA
* Many pages of disclosures
* A recommendation to use C-f in an electronic copy to find the right things
That's not going to work. In CA, for instance, you'll receive a disclosure telling you about leaking tanks on your neighbour's property and so on for a mile or so. And no one, literally no one will provide you with an executive summary that they'll stand by.
But you know what? It doesn't matter. It's your house. Read what you want. C-f if you want.
The nagging suspicion is that it isn't the flood/fire risk that's the problem but that all desirable areas were built out 100 years ago. That leaves everyone without generational wealth to be pushed into risky areas. There's whole neighbourhoods and towns built where they shouldn't be, and with climate change it's only going to get worse.
And try to build higher than 4 stories in already built up places like San Francisco. Local groups will do everything to stop you. The heart breaking thing is Bay Area environmental groups like the Sierra Club are aligned with the anti-development crowd. They actively fight infill, but won’t acknowledge or see that encourages sprawl.
I'm thinking of places like New Orleans. The original city was built on a river bluff but then it expanded into the river bottoms. You have that phenomenon all along major rivers, towns expanding from upland settlements onto agricultural areas that are 100-year floodplains.
Of course, when the inevitable flood comes and everything is under water the urge to rebuild is stronger than accepting reason and settling elsewhere, also because money is missing, especially for the flooded-out people.
I looked at purchasing a home in another cheaper locale and also came to this observation. This area has regular floods. New neighborhoods had flood problems. Old neighborhoods did not. The areas without flood problems, and close enough the to main job corridors, were priced high enough to defeat the benefits of moving for the sake of a lower cost of living.
New Orleans is even worse because the Mississippi ought to be changing course so it moves through downtown. They have an extensive series of levies to prevent this from happening.
I get that this is true if you define desirable as “conveniently located close to natural beauty”.
But it doesn’t follow that all other areas are risky. They may just be less immediately appealing.
Indeed a lot the places that are at high risk of fire, are high end neighborhoods where relatively rich people bought because they are beautiful places to live.
If anything, I expect things to get better as people start to value less risky areas over more traditionally beautiful areas and we start to see some equilibrium.
If that's your definition of "desirable," come to Upstate NY—and the non-urban Northeast in general.
There's vast amounts of "natural beauty" here, nearly everywhere you could look. And while, sure, the lakeside real estate has a higher tendency to be owned by the wealthier people in the area, there's loads of land with fantastic views and easy access to beautiful woods, streams, hilltops overlooking wide valleys, etc.
The caveat is, of course, that it's rural—you can't have this sort of thing and still be 5 minutes' walk from four different top-quality restaurants, or even, in some cases within a half-hour's drive of a Starbucks.
Sure - it’s not ‘my definition’ it’s a common one.
You have provided another one which is equally valid and supports my point better than my own definition.
The comment I was replying to claimed that all the desirable areas were built out 100 years ago leaving everyone else with only risky areas to live in.
It seems like there are plenty of non-risky areas to build out. If the only problem is that they are rural, that won’t be a problem for long.
In the Bay and nearby all the fire risk is in desirable areas. Lake Merced is pretty safe from natural disasters as is Vis Valley. I think they aren't even tsunami zones.
Yes, poor people often incur environmental risk by inhabiting undesirable urban land that's risky.
But it is also very common for the wealthy to intentionally take on flood/fire risk so they can be in the most-desirable areas with natural beauty. Many of the big fire hazards are in towns filled with ski resorts, vacation homes, wealthy retirees with ranches. Many of the big flood hazards are wealthy people attempting to live too close to the ocean, or too close to a river, than is safe.
It’s pretty trivial to find if a property is in a floodplain. A mortgage is such a significant financial burden that I would hope most people would thoroughly research a property before signing a contract. However, many people can’t be bothered to care until their mortgage underwriter forces them to buy insurance. Most of those assume everyone just gets bailed out whenever their house at the bottom of a valley floods.
When I lived in Palo Alto 25 years ago, and one of California’s periodic droughts ended, a lot of recent arrivals were VERY surprised to discover than a lot of Palo Alto is a flood plain area. When they moved in, it hardly ever rained, much less flooded. (Also, I suspect they may not have bought earthquake insurance.)
I rented a room in a house in San Jose through the absolute garbage company that was HubHaus.
The person who owned the home and rented it to hub haus had bought the home like 4 years before I moved in and had a bunch of work done by shady contractors without a permit.
Well in 2019 Cali finally got out of its drought and the deck that sloped into the house connected to my room had water pool on it and then leak into the house.
Landlord claimed it had never happened before and so clearly it was my fault. Hub Haus being the spineless crooks they are sided with the landlord despite clear evidence of code violations and lack of permits.
I’d say that’s poor workmanship rather than flooding as defined by NFIP. Sloping an addition away from a structure is pretty basic. The contractor might be bonded, but you don’t own the property, so I wouldn’t say there’s much recourse for you, unfortunately.
Generally speaking, residential construction is very high risk for meager returns. Market incentives just don’t align with spending an additional 2-3X on labor to use expert craftsman.
I get that is isn't always obvious when you're in a flood plain, but... Some years ago I visited a home in the U.S. southwest where the owner complained that they were the surprise victim of a flood within a year of purchasing the house. It seems that they had no idea that their house was positioned in the dead center of a wash. I don't think they even knew what a "wash" was. Even after the flood.
I took them outside and pointed to the road coming to their driveway.
Me: "See that embankment you come down about 40 feet from your driveway?"
Them: "Uh-huh."
Me: Turning to the left, "See that embankment that goes up about 50 feet past the other side of your house?"
Them: "Yeah..."
Me: "Doesn't it kind of look like two river banks with no water in between?"
Them:"Umm... But there _is_ no water."
Me: "That's because it hasn't rained in over 100 days. 360 days a year, this will be dusty dry."
Them: "Exactly"
Me: "There are more than 360 days in a year."
Sometimes, nobody thought to warn you because it was painfully obvious. Like the rattles on a snake. Unless you've never heard of a rattlesnake before.
I'm just curious, I live in the Midwest U.S. and here if you live in a designated flood plane, you have to buy flood insurance. There is no way to not know you are in a flood plane. I think the rule is that if it flooded within the last 100 years, it is automatically designated a flood plane too. Is this not how the rest of the U.S. operates? (within some variation of course)
Does that 100 year rule apply to undeveloped areas? My neighborhood is 20 years old and before it existed, it was wilderness in the middle of nowhere. I wonder how well flood data is tracked for that type of land.
From what I remember (where I am obviously), the Department of Water division of the Department of Natural resources surveys pretty much all of the area of the state. When someone builds something in a new place, there is quite a bit of research that goes into water tables, flood zones, etc. I would assume they map that out, but honestly I can't say for certain. I do know that it's occurred on occasion that rules get "bent" to make certain things happen. It's politics and money, and permitting is a high visibility job.
I used to do permitting for construction of aerial and buried fiber networks.
Typically if you're doing some sort of thing where floodplain data is needed, you'll start by finding the dataset from USGS/FEMA/USGIS/etc. Import that in, you'll get a whole bunch of data that depending on package (i.e. if you are doing stuff in AutoCAD instead of working with real GIS software) you might have to shape to get more proper information; floodplain data looks like a bunch of contoured lines (often semiparallel to each other.) based on the survey, and have different embedded metadata accordingly.
So you'll do your drawing based on that, and ideally at some point, a Surveyor goes out and will Verify the map. They'll do this by probably re-pulling the original survey data, going out to the site, and basically making sure you didn't lie in your map.
This last part BTW is an important check&boundary, and IMO the more important one than municipal approval. A good professional surveyor knows that if he does the wrong (i.e. potentially harmful) thing, he could lose his license and livelyhood forever. Professional Seals are something that I have a lot of respect for.
FWIW, this is often the easier part of getting a permit as long as you are building sanely. The city is where politics, money, and process gets broken.
It's also based on simulations. They army corp of engineers runs simulations to figure out where the flood planes are and also where they can dump water in the case of flooding. Saved new orleans about 10 years ago from being completely underwater.
There is no 100 year rule. To the extent that "N-year floods" exist, or their hypothetical water levels, that is all more of an arbitrary label than a scientifically-valid designation.
realistically they're measuring "big floods" and "bigger floods" in a way that is consistent, however the stated time frequency with which they supposedly occur is so extremely inaccurate that it does not rise to the level of 'science.'
Private Mortgages may require flood insurance depending on factors, depends on the bank and their rules. Govt Backed mortgages (i.e. FHA) will require for 'high risk' areas. However you can still have a flood within 100 years in your area but not be required to have insurance (I live in such an area.) Typically this is for cases where flooding is going to be very minor; i.e. in this area it can happen but it's a small enough flood both in size and depth it doesn't meet the criteria. As a result, savvy folks just make sure not to keep anything expensive out of their basements. Less savy folks take extra trash out after a bad rain.
FEMA flood maps, which are used to determine flood insurance requirements as part of a mortgage origination, are woefully out of date. It doesn’t take a lot of water to cause damages exceeding the resources of your average homeowner.
To the savvy real estate buyer, I recommend https://floodfactor.com to accurately quantify the flood risk of a potential property. They have stepped in where FEMA has dropped the ball.
My point was that something blatantly obvious to one person is not necessarily so to another person. I know not to play with rattlesnakes, but if I went to Georgia and saw a snake swimming through the water, I might assume that it was perfectly harmless because it wasn't a rattlesnake. But a Georgian might think me a complete idiot.
Assuming what’s painfully obvious to you is painfully obvious to everyone is how major accidents and mistakes happen.
What you have described is an indictment of our educational system on several different fronts, and a testimony of the need for broad education not just giving people enough to know a narrow field where they can earn money but be ignorant and uniformed of everything else.
Their inability to see what seems like common sense to people familiar with washes is one example. Your inability to see that people without any background knowledge on a topic will have trouble understanding the topic is another example.
> What you have described is an indictment of our educational system on several different fronts, and a testimony of the need for broad education not just giving people enough to know a narrow field where they can earn money but be ignorant and uniformed of everything else.
this is a bit much. all you need to understand to recognize the potential problem is the basic fact that water flows downhill. this is sort of like buying a house right next to a college dorm during the summer break and complaining that no one warned you college kids like to party.
Dialing down the blast radius on your comment, imagine if homebuyers were required to pass the same sort of locally-tuned competency test on houses and real estate that new drivers must pass to get their driver’s license. No need to restructure the educational system.
Imagine a “renter’s/buyer’s” general ED course in high school, and requiring the passing of a local “buyer’s test” prior to signing. It would be prudent from an investment standpoint and a “Welcome to the neighborhood” for newcomers who have never lived in a flood plain, experienced a tornado, etc. or even owned a home.
One can't buy a house in California, at least, without being given a "statutory natural hazards disclosure"[1] and signing multiple documents certifying that you've read it. It includes detailed maps about flood and fire risk. You can also order a report for a rental property for a nominal fee.[2]
The JCP-LGS reports actually have good signal/noise ratio, at least in the bay area. I've examined many dozens over the last decade, from Santa Cruz to Marin. In many cases, I've checked them against 3rd-party reports on dams and faults. Financial risk from earthquake is especially high (though widely variable) for property owners in the East bay.
The stack of paperwork on a house is just that, a stack.
You can certainly request the paperwork before signing it, but you'll be spending a week reading legalese. Even then, negotiating terms is going to take time too. In a hot market, the seller is more incentivized to just go with the next highest bidder and skip the legal negotiating that they themselves may never have read either.
I'm not saying you are wrong, but it's never really done for a reason.
At least in the bay area, several homes I looked at had clear disclosures stating that they were in "very high fire hazard zones."
The bigger issue for us was what to do with this info. The best the realtor can do is say your homeowners insurance may be more expensive. But, the realtor won't know if insurance companies will decide to stop covering homes in high fire danger zones.
I think many people see the high fire danger zone disclosure and just hope that the state government will force insurance companies to keep covering their homes.
I had a real estate agent tell us "that house is uninsurable due to the roof." It was a wooden roof in a high fire zone. A good agent can be useful.
The state of California can't force insurance companies to write new policies or to not cancel existing policies. To make matters worse, insurance companies can't generally raise rates on existing policies so their only recourse is cancellation.
If all else fails there is a high risk FAIR plan as insurer of last resort, but it is much more expensive and covers nothing but fire.
1. Was looking for a place to rent near tech companies here in brazil, one house was obviously heavily modified to withstand floods, all doors were made of aluminum, there was in multiple places tubes to get rid of water, raised platforms for expensive objects and so on. Asked realtor about it, he said the area used to flood often, but all that stuff was a relic of the past, because there was no flood last year so he was sure it wouldn't flood again.
2. I rented another house, place didn't look like a floodable place, it flooded anyway because there was river channeled under the house, when there was rain in another town upstream the river managed to gush out of the drains and become above ground along its original course, cars on the street even floated away. My stuff got destroyed so I asked the realtor why he didn't warn me, he replied that last flood was 20 years ago so he didn't think it was relevant because he believed it wouldn't ever flood again...
EDIT: just to make clear, these was two different realtors, also although both places was in same city, they were in wildly different areas.
Sharing my horror story. Rented a flat (with 3 flatmates) in Oxford as a student. The place was 'close' to a river, for a generous definition of the word, but, certainly not right next to it, or close enough to even think about flooding when we rented the house. Two months later, the river floods. Every single house in the area was equiped with sandbags which they took out, because apparently this was a very common occurence in the area. The house basement got completely flooded, like 1.5 meters of water, (and destroyed some stuff we were storing in the process). It got to the point where we were worried it would reach the electrics and short-circuit. The agency washed its hands on the matter.
Fast forward a few months, the agency was arranging house viewings for the next tenants, and it happened to be flooding season, with the basement again having 1.5 metres of water. They deliberately chose a day when we said we would not be at home for their viewing, and said to the prospective tenants that they could not show them the basement because we had 'locked' it or something, "but there's nothing down there anyway". Apparently that group signed the same day.
Here in CA the disclosure packets that I've seen all included the FEMA map and you had to initial it. The risk of failing to disclose something is way too high. I've even seen a lot of things like "while we think there's no asbestos there could always be in a house that old", which obviously then makes the whole thing useless.
My aunt and my mom both died in the same year. When selling their houses for their estates the realtors both said "you can skip the disclosure part" because I didn't own the house myself.
I did happen to know that my mom had had asbestos removed from the kitchen in her 1972 home. It was required when she remodeled. But I had never been to my aunt's home (1000 miles away) until she had died. It was built the same year and I bet it did have asbestos in it because it had never been remodeled.
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[ 0.25 ms ] story [ 186 ms ] threadThat’s not how people tend to approach home buying it seems.
even very intelligent people tend to suck at estimating/weighting risks
homebuying is probably near a worst-case scenario for this because it's
1. one of the biggest purchases most people can ever make
2. loaded with emotion, cultural norms, and other things that make it very easy to make bad/risky choices
I know someone who lucked out because his wife was the daughter of a man whose whole family worked construction (including him), and she paid attention. When they went to buy their first home, he saw no issues with most of the properties, while she could see "Foundation's cracked here, that smell is untreated basement flooding... See back here where this retaining wall was built? Where do you figure the water goes after it hits that wall? That's a nice little creek behind this house; it's a shame you can see from the silt pattern that it's been walking south for awhile as that hill rolls down and will be under this house's foundation in five years."
A former boss of mine said that when he bought a house in Nevada they had him sign a notice acknowledging that gambling was legal in the state he was purchasing a house in.
Recently bought in Tahoe and less disclosures than San Francisco, but certainly quite clear about fire danger.
If that source lags behind reality, or fails to give a picture of future trends, people still get caught unaware.
Isn't this fundamentally the role of insurance? They have the incentive to look forward and anticipate risk, and if flood insurance is particularly expensive or just plain unavailable on a given property, you should look at why.
Is there a generic form like "Give me insurance quotes for every possible type of coverage" that a prospective homebuyer could fill out and submit to a few different insurers, to get a picture of such red flags?
Perhaps developers should have to bond new housing against floods prior to construction. Fully funded, third party bonds. Sensible locations will more or less be free.
The obstacle to a functional flood insurance market are all the people who can't afford market premiums, who have complained to their politicians, demanding that the rest of society subsidize their property risk.
Around me a basically large area that flooded yearly was somehow magically rezoned, developed all the houses sold and then boom a few years later.. guess what guys... 'we're soorry'
I’m in the process of buying a home in Washington and my agent says she’s never had a client waive the inspection contingency unless they’re buying a cheap fixer-upper to flip.
Edit: Also, the expectation was auto-escalating offers, eBay style. The owner set a date to take offers and picked the best one.
In the last 15 years I've purchased in both Toronto and in rural Ontario with the full set of conditions; financing, inspection, etc. As a buyer I simply won't do it otherwise. We have a 6 acre hobby farm near Hamilton.
But I also just don't bother to go look at properties with language in the text like "Accepting offers on...". We won't play the multiple offers game. In Toronto maybe this is the only way to get a home, but we were able to avoid it there back in 2005 by just hunting in areas that weren't "cool."
My experience is there's always almost other places that come up, where the seller has more scruples.
We might sell our hobby farm soon. I would fully expect any potential buyer to demand inspection.
Aside from the stress of weekly rushes to view, inspect, bid, and bid-up, the process primarily compressed the entire process into a short period of time. The biggest inefficiency was that essentially all buyers were forced to become journeyman experts at the compressed-time process.
It seems like it is healthiest for homes to be on the market for about two weeks. Part of the trouble with short-duration listings is that it is a high-stakes version of the optimal-stopping problem. I think a little more holistic visibility into the market's offerings might yield better matches between buyers and homes.
Choosing an abode for the next few decades amidst weekly auto-escalation bidding wars just doesn't seem healthy for the future dwellers.
A good example of the kind of change I’m talking about is development in 100-year flood plains in Houston[0]. 30 years ago, a naive home buyer would not have had to worry about it, because flood plains were off limits. What changed? Greedy developers? Ignorant planners? More population? Perhaps all of it. But now you have to be educated to make the right call.
[0] https://www.houstonchronicle.com/news/houston-texas/houston/...
Using Houston as an example, 50 to 100 years ago it was the norm to bring in fill dirt from other regions, flatten and grade a piece of land, and construct a gridded residential neighborhood with total disregard for natural drainage. Flooding was dealt with by artificially channelizing bayous and streams, which is why Houston's urban waterways look so unnatural. Many of these older neighborhoods along the gulf coast were unsustainable and are not being rebuilt after hurricanes.
Starting around 30 years ago, local, state and federal policymakers started to get a clue. Neighborhoods were more commonly build to accomodate the drainage patterns -- this is why developments from the 1990's, 2000's tend to have large retention ponds, (example: https://www.google.com/maps/@29.5517845,-95.4295706,3a,75y,2... )
while neighborhoods from the 1950's-60's do not.
As I understand it, in competitive urban markets it has become common for sellers to do a pre-inspection and then sell / provide that info for interested parties. This potentially makes for a faster sale and may create a more competitive situation if more potential buyers see less risk in the condition of the house and are willing to make an offer. But, at least in my state, anything a seller learns about the condition of their home must be disclosed so this could also backfire.
Any time you can remove a contingency in a competitive situation it will be a potential advantage, but caveat emptor all day long - sellers seldom have a complete understanding of their home and property so it is to the buyer's best interest to do everything they can to inform themselves before completing the purchase.
Most inspections are "pay us <stupid_number> to point out the obvious and we don't include <list of anything that requires more than just walking around the house eyeballing things to determine> and our liability limited to <price of inspection>". It's no surprise people wave them.
I researched my own inspector and chose a very technical retired engineer. He identified significant issues with the home that resulted in the price being reduced by 15%. You're an idiot if you waive inspections.
I've never needed to call anyone else so I just assumed they were all like this.
The article says waiving of inspection is out of control and going up, but nowhere near "most".
Of course your local market is probably completely different than the entire US overall.
Economists define the natural interest rate as "the interest rate that supports the economy at full employment/maximum output while keeping inflation constant"[wikipedia]
For the last decade we've seen very little time at full employment and absolutely no accelerating inflation by any standard measure. So by any textbook definition of a natural interest rate we've been keeping interest rates too high.
Agreed interest rates are at an all time low. At the same time, the supply of loans is at an all time high, thanks to new (old) mechanisms like loan securitization being thoroughly commoditized.
Discuss - why shouldn't the price of loans (interest rates) be subject to the laws of supply and demand just like everything else?
They should be. It doesn't work though when the Fed comes along and buys the lion's share of loans.
A $1,000 1 yr bond is a promise to a $1,000 in 1 year. If you'd pay $500 for it than the interest rate is 100%. If you bid it up to $750 than interest rates drop to 33%.
If the Fed comes along and buys loans from the Banking system it increases the supply of loans... (banks are restricted by Basel Capital regulation in the supply of loans they can provide, otherwise too much liability money creation.)
If they buy loans from anybody else - since the Fed creates money to do so (by virtue of also being a bank), they again potentially increase the supply of loans, if the lenders then relend the money.
And the total quantity of debt goes up, its price goes down, and everybody wonders why.
https://en.wikipedia.org/wiki/Alarm_fatigue
* CA
* Many pages of disclosures
* A recommendation to use C-f in an electronic copy to find the right things
That's not going to work. In CA, for instance, you'll receive a disclosure telling you about leaking tanks on your neighbour's property and so on for a mile or so. And no one, literally no one will provide you with an executive summary that they'll stand by.
But you know what? It doesn't matter. It's your house. Read what you want. C-f if you want.
[0]https://www.car.org/-/media/CAR/Documents/Industry-360/PDF/P...
Of course, when the inevitable flood comes and everything is under water the urge to rebuild is stronger than accepting reason and settling elsewhere, also because money is missing, especially for the flooded-out people.
But it doesn’t follow that all other areas are risky. They may just be less immediately appealing.
Indeed a lot the places that are at high risk of fire, are high end neighborhoods where relatively rich people bought because they are beautiful places to live.
If anything, I expect things to get better as people start to value less risky areas over more traditionally beautiful areas and we start to see some equilibrium.
There's vast amounts of "natural beauty" here, nearly everywhere you could look. And while, sure, the lakeside real estate has a higher tendency to be owned by the wealthier people in the area, there's loads of land with fantastic views and easy access to beautiful woods, streams, hilltops overlooking wide valleys, etc.
The caveat is, of course, that it's rural—you can't have this sort of thing and still be 5 minutes' walk from four different top-quality restaurants, or even, in some cases within a half-hour's drive of a Starbucks.
You have provided another one which is equally valid and supports my point better than my own definition.
The comment I was replying to claimed that all the desirable areas were built out 100 years ago leaving everyone else with only risky areas to live in.
It seems like there are plenty of non-risky areas to build out. If the only problem is that they are rural, that won’t be a problem for long.
Yes, poor people often incur environmental risk by inhabiting undesirable urban land that's risky.
But it is also very common for the wealthy to intentionally take on flood/fire risk so they can be in the most-desirable areas with natural beauty. Many of the big fire hazards are in towns filled with ski resorts, vacation homes, wealthy retirees with ranches. Many of the big flood hazards are wealthy people attempting to live too close to the ocean, or too close to a river, than is safe.
It’s pretty trivial to find if a property is in a floodplain. A mortgage is such a significant financial burden that I would hope most people would thoroughly research a property before signing a contract. However, many people can’t be bothered to care until their mortgage underwriter forces them to buy insurance. Most of those assume everyone just gets bailed out whenever their house at the bottom of a valley floods.
I was a FPA for 2 years for a mid-sized city.
The person who owned the home and rented it to hub haus had bought the home like 4 years before I moved in and had a bunch of work done by shady contractors without a permit.
Well in 2019 Cali finally got out of its drought and the deck that sloped into the house connected to my room had water pool on it and then leak into the house.
Landlord claimed it had never happened before and so clearly it was my fault. Hub Haus being the spineless crooks they are sided with the landlord despite clear evidence of code violations and lack of permits.
Generally speaking, residential construction is very high risk for meager returns. Market incentives just don’t align with spending an additional 2-3X on labor to use expert craftsman.
I took them outside and pointed to the road coming to their driveway.
Me: "See that embankment you come down about 40 feet from your driveway?"
Them: "Uh-huh."
Me: Turning to the left, "See that embankment that goes up about 50 feet past the other side of your house?"
Them: "Yeah..."
Me: "Doesn't it kind of look like two river banks with no water in between?"
Them:"Umm... But there _is_ no water."
Me: "That's because it hasn't rained in over 100 days. 360 days a year, this will be dusty dry."
Them: "Exactly"
Me: "There are more than 360 days in a year."
Sometimes, nobody thought to warn you because it was painfully obvious. Like the rattles on a snake. Unless you've never heard of a rattlesnake before.
I think it shows the opposite. This person bought a house, was a victim of a flood, and still didn't realize they were in a flood plain.
I used to do permitting for construction of aerial and buried fiber networks.
Typically if you're doing some sort of thing where floodplain data is needed, you'll start by finding the dataset from USGS/FEMA/USGIS/etc. Import that in, you'll get a whole bunch of data that depending on package (i.e. if you are doing stuff in AutoCAD instead of working with real GIS software) you might have to shape to get more proper information; floodplain data looks like a bunch of contoured lines (often semiparallel to each other.) based on the survey, and have different embedded metadata accordingly.
So you'll do your drawing based on that, and ideally at some point, a Surveyor goes out and will Verify the map. They'll do this by probably re-pulling the original survey data, going out to the site, and basically making sure you didn't lie in your map.
This last part BTW is an important check&boundary, and IMO the more important one than municipal approval. A good professional surveyor knows that if he does the wrong (i.e. potentially harmful) thing, he could lose his license and livelyhood forever. Professional Seals are something that I have a lot of respect for.
FWIW, this is often the easier part of getting a permit as long as you are building sanely. The city is where politics, money, and process gets broken.
realistically they're measuring "big floods" and "bigger floods" in a way that is consistent, however the stated time frequency with which they supposedly occur is so extremely inaccurate that it does not rise to the level of 'science.'
Private Mortgages may require flood insurance depending on factors, depends on the bank and their rules. Govt Backed mortgages (i.e. FHA) will require for 'high risk' areas. However you can still have a flood within 100 years in your area but not be required to have insurance (I live in such an area.) Typically this is for cases where flooding is going to be very minor; i.e. in this area it can happen but it's a small enough flood both in size and depth it doesn't meet the criteria. As a result, savvy folks just make sure not to keep anything expensive out of their basements. Less savy folks take extra trash out after a bad rain.
To the savvy real estate buyer, I recommend https://floodfactor.com to accurately quantify the flood risk of a potential property. They have stepped in where FEMA has dropped the ball.
I'm sure we've all talked ourselves into a stupid decision or two because you really wanted something.
What you have described is an indictment of our educational system on several different fronts, and a testimony of the need for broad education not just giving people enough to know a narrow field where they can earn money but be ignorant and uniformed of everything else.
Their inability to see what seems like common sense to people familiar with washes is one example. Your inability to see that people without any background knowledge on a topic will have trouble understanding the topic is another example.
this is a bit much. all you need to understand to recognize the potential problem is the basic fact that water flows downhill. this is sort of like buying a house right next to a college dorm during the summer break and complaining that no one warned you college kids like to party.
Imagine a “renter’s/buyer’s” general ED course in high school, and requiring the passing of a local “buyer’s test” prior to signing. It would be prudent from an investment standpoint and a “Welcome to the neighborhood” for newcomers who have never lived in a flood plain, experienced a tornado, etc. or even owned a home.
It blows back on a whole community when a chunk of the community gets flooded out.
[1] https://en.wikipedia.org/wiki/Standardized_Natural_Hazards_D...
[2] https://orderform.disclosures.com
You can certainly request the paperwork before signing it, but you'll be spending a week reading legalese. Even then, negotiating terms is going to take time too. In a hot market, the seller is more incentivized to just go with the next highest bidder and skip the legal negotiating that they themselves may never have read either.
I'm not saying you are wrong, but it's never really done for a reason.
The bigger issue for us was what to do with this info. The best the realtor can do is say your homeowners insurance may be more expensive. But, the realtor won't know if insurance companies will decide to stop covering homes in high fire danger zones.
I think many people see the high fire danger zone disclosure and just hope that the state government will force insurance companies to keep covering their homes.
The state of California can't force insurance companies to write new policies or to not cancel existing policies. To make matters worse, insurance companies can't generally raise rates on existing policies so their only recourse is cancellation.
If all else fails there is a high risk FAIR plan as insurer of last resort, but it is much more expensive and covers nothing but fire.
The state did exactly that less than a year ago: https://www.google.com/amp/s/www.nytimes.com/2019/12/05/clim...
Absolutely right that you can’t force the companies to write new policies, though.
1. Was looking for a place to rent near tech companies here in brazil, one house was obviously heavily modified to withstand floods, all doors were made of aluminum, there was in multiple places tubes to get rid of water, raised platforms for expensive objects and so on. Asked realtor about it, he said the area used to flood often, but all that stuff was a relic of the past, because there was no flood last year so he was sure it wouldn't flood again.
2. I rented another house, place didn't look like a floodable place, it flooded anyway because there was river channeled under the house, when there was rain in another town upstream the river managed to gush out of the drains and become above ground along its original course, cars on the street even floated away. My stuff got destroyed so I asked the realtor why he didn't warn me, he replied that last flood was 20 years ago so he didn't think it was relevant because he believed it wouldn't ever flood again...
EDIT: just to make clear, these was two different realtors, also although both places was in same city, they were in wildly different areas.
I did happen to know that my mom had had asbestos removed from the kitchen in her 1972 home. It was required when she remodeled. But I had never been to my aunt's home (1000 miles away) until she had died. It was built the same year and I bet it did have asbestos in it because it had never been remodeled.