Different kind of a green dot

Are the new FEMA flood maps good news?

Green will become the favorite color for thousands of New Orleans property owners when the new FEMA flood maps finally become official at the end of the month.

That’s because green is the code for areas that will move out of flood zones and into areas with no insurance requirements – and the new map shows it washing over large sections of the city.

The maps were released for comment in 2009, but the city appealed several times, claiming the airborne radar system used to determine elevations had made errors, and that FEMA had not considered improvements made to levees and drainage systems. It won both appeals, resulting in improvements to the maps.

If you own property it's probably good news.  If you don't own property or are thinking about buying property it's less clear. Theoretically it lowers the cost of a mortgage.  Which is nice if we're talking about a market driven mostly by single families purchasing primary residences. But I'm not so sure that's the case.

There's evidence to suggest that real estate in New Orleans is overheated by the presence of speculative investment in second homes and possible short term rental properties, not only by individuals seeking home loans, but also by companies with the capital to transact in cash.  In that context, the removal of mandated flood insurance as a concern may just spur more like investment and keep pushing prices up and up.

Plus, given what we know about subsidence, erosion, and rising sea levels, aren't these maps also.. you know.. probably wrong? I mean, I think I'll trust our new "state of the art" flood protection system for another 5 or 10 years. Probably not for the life of a 30 year mortgage, though.

Update: Just to add, that's probably the future of development in New Orleans.  More about short term investment than long term community building. It's how The Market squeezes out whatever remains of the value here before it all sinks into the sea.