Future trends to watch in our real estate market

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Hurricanes Helene and Milton are clearly going to have a significant impact on St. Petersburg’s real estate market in the months and years to come.

If there is anything positive we can take from the experiences of the past few months, it’s that residents and business owners will be looking for ways to make their properties – and, in turn, our area – more resilient in the future.

That said, there are many hard choices to be made, because resiliency comes at a cost. And in situations where money is tight, there are often no easy answers.

With this in mind, here are three things to watch as recovery continues and St. Petersburg looks to the future:

Many homeowners with damaged homes face difficult decisions on whether they can afford to repair or rebuild.

Regulatory requirements will force some impacted homeowners to meet new code requirements for a rebuild if the damage amounts to over 50 percent of the home’s value. In many coastal locations, this could mean raising the house at least 10 to 12 feet.

According to this FEMA rule, if a property has been deemed “substantially damaged,” the cost of repairs cannot exceed 50% of the property’s pre-damage market value unless the property is brought into compliance with current floodplain management regulations.

So, for many homeowners who receive a “substantial damage letter” from their county Property Appraiser, the choice will be whether to rebuild – which could be expected to cost $200,000 or more – or to sell their homes for the land value (either before or after demolition of the home). In turn, this could cause more coastal homes to go on the market in the coming months.

Commercial tenants will be looking for ways to better protect themselves from losing their businesses after natural disasters.

Tenants should be asking their insurance agent to take a fresh look at their insurance policies – in particular, the casualty provisions. Also, you or your attorney should review the pertinent provisions in your lease.

For example, make sure that if a disaster happens, your lease provides that you will get an answer within a reasonable timeframe on whether the landlord plans to rebuild. (A period of 60 to 90 days is good, but I’m seeing leases that allow the landlord 180 days or more to make a decision.) With this provision, tenants will be able to quickly make their own decisions on what to do.

Also, your lease should provide that the landlord must proceed with repair and restoration with commercially reasonable due diligence. If not, the tenant should be able to terminate the lease and relocate.

As coastal property owners plan for the future, they will see that flood insurance won’t eliminate their risk.

It’s important to know that the national flood insurance program will not cover over $250,000 in damages, and that supplemental private flood insurance companies may deny or limit claims for any number of reasons.

If you are building – or rebuilding – in a flood zone, it may make the most sense to manage your risk by upgrading your property to comply with current building codes for flood-prone areas. This, in addition to carrying flood insurance, should minimize your risk.

Larry Silvestri is president of St. Petersburg-based Silvestri Law. The firm works in the real estate transactions sector, including commercial leases, title insurance and closings.