Homeowners can't sell uninsured homes and buyers can't get insurance
Ten years ago, discussing home insurance early in the buying process wasnt common in California. If you needed more than standard coverage, you simply got it. But today, insurance plays a big role in home sales.
With rising climate risks, insurance companies are leaving California, making premiums higher and home purchases more expensive. Real estate platforms like Zillow now highlight climate risks such as floods and fires, making these issues unavoidable for buyers.
According to real estate agent Alex Michas quoted in a recent SFGate story, the cost and availability of insurance is now a top concern for Bay Area buyers, even more than getting a mortgage.
Hes noticed fewer buyers interested in homes in the East Bay hills, likely due to the difficulty of securing insurance. High interest rates have also masked the impact of insurance on property values, but Michas expects this to become more evident soon.
The same is true in the Southland. One homeowner in Los Angeles has been without insurance on his $1 million townhouse since last year when a pipe burst and caused extensive damage. The accident could have happened anywhere but because it was in Southern California, his policy was not renewed and he has been unable to find a new one.
Selling the townhouse without insurance is not really an option so, like many others, he is stuck with a property he can't insure and can't sell.
Zillow's OK but ...
Zillow has added climate risk data to its listings, but Michas advises not relying solely on this information. Too much data can overwhelm buyers, leading to analysis paralysis, where they struggle to decide whats important.
In California, increasing wildfire risks and major insurers leaving the state are making it harder to find insurance, and more deals are being canceled as a result.
Sellers may need to make improvements or offer credits to address climate-related issues and keep buyers interested, as insurance challenges are becoming a major factor in the housing market, analysts said.
Photo Credit: Consumer Affairs News Department Images
Posted: 2024-10-25 01:40:46
