Resilient Building Standard ups home values, study finds.
"During the past eight years, committed leadership from the White House has effectively framed and advanced the issue of mitigation throughout the public and private sectors. As the result of their efforts, and persistence of the insurance industry and our allies who have been working to identify and promote effective ways to increase the resilience of homes, businesses, and communities, there is much greater focus on mitigating damage from a variety of weather-related risks than ever before," said IBHS General Counsel and Senior Vice President, Public Policy Debra Ballen.
When asked what successful mitigation looks like, she noted how strong, well-enforced building codes are a starting point, but limited because they apply overwhelmingly only to new construction; and, that about a dozen states that do not currently have statewide codes in place, and many locations with codes do not enforce them effectively. As a result, Ballen observed, "IBHS developed the voluntary, market-based Fortified Home program, which is a set of engineering and building standards designed to help strengthen new and existing homes through upgrades to minimum code requirements that can reduce damage from specific natural hazards."
Independent research sponsored by the Alabama Center for Insurance Information and Research (ACIIR) at the University of Alabama examined the effect of IBHS Fortified Home designations on home values in Mobile and Baldwin counties, finding that a) switching from a conventional construction standard to a Fortified designation increases the value of a home by nearly 7 percent holding all other variables constant; and, b) Fortified-grade properties or retrofitting a home to meet Fortified standards is an economically sound investment. The additional cost of building or retrofitting a house is frequently less than 7 percent of a home's value; therefore, the benefit of a Fortified designation is very likely to outweigh costs. This is without considering other direct benefits such as insurance premium discounts, potential uninsured rebuilding costs, and the inconvenience of temporary housing following a natural disaster. The ACIIR adds that given the robustness of statistical results, it is appropriate for appraisers and financial institutions to reflect Fortified designations in appraisals for use in the mortgage process.
In addition to the ACIIR, "Estimating the Effect of Fortified Home Construction on Home Resale Value," is co-authored by Auburn University and University of Mississippi professors with expertise in finance and real estate. "This report is a great example of the practical application of academic research methods. We are very confident in the results and hope they will affect public and private behavior to make exposed communities more resilient to natural disasters," notes ACIIR Director Lawrence Powell, PhD. "This is more tangible evidence that Fortified homes are not only better able to resist disasters, they also are being valued higher in the marketplace."
"[The] White House Forum reminds us that we know resilient communities fare better following disasters than those that have not prepared. Resilient communities have stronger, safer buildings that can stand up to Mother Nature, and disaster recovery plans in place. As a result, they are better able to withstand severe weather events because there are fewer lives lost, personal injuries, and damaged homes and businesses."
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|Title Annotation:||GOVERNMENT AFFAIRS: AGENCIES|
|Date:||Sep 1, 2016|
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