Could Mandatory Flood Insurance in the Natomas Area of Sacramento Impact the Market?

On December 8, 2008, flood insurance became mandatory for the Natomas Area of Sacramento. Since the U.S. Army Corps of Engineers determined that the Natomas area was at a greater risk for flooding because of a weakening levy system, the area was rezoned and homeowners are now forking out greenbacks for flood insurance.  

It will be interesting to see how the Natomas situation plays out and to see if there is much of an effect on the real estate market. What are your thoughts? Any home owners, agents, or other real estate professionals want to pitch in here? Do you think buyers care about flood insurance? Do some buyers avoid Natomas to not pay for this insurance? Or is it no real biggie?

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I have not conducted an exhaustive study on the matter and so I won’t speak to any real effect, but I will say that when certain changes take place, such as economic, governmental, or zoning changes, there could be an impact on the local market. As an appraiser, this highlights for me how important it is to have “geographical competency” and really know what is going on in the market – especially the changes.   

Eastern Natomas Trend Graph: Below is a 12-month trend graph of a portion of Eastern Natomas with blue dots representing “sales” and red dots representing “listings”. The graph data is bound on the North by Elkhorn Blvd., West by I-5, East by Vacant Land, & South by Del Paso Road.

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