Interest rates and high home prices used to be the main issues affecting homeownership in California. But real estate agents say the focus has now shifted to homeowners insurance as well.
Numbers released by the California Association of Realtors show an alarming trend. This year, hundreds of homes were sold in escrow because buyers couldn’t find home insurance, nearly doubling the number from last year.
“Insurance was never thought of as one of the first things to think about,” said Michelle Perry, president of the Santa Clara County Association of Realtors. “In some cases, it may be better to look for insurance before making an offer.”
The California Association of Realtors received survey responses from approximately 3,000 real estate agents in the state.
Of those, 13%, or about 450, said their deals fell out of escrow because the buyer couldn’t find insurance. That’s nearly double the 7% who reported it happened last year.
The majority refused, but about 18% said the premiums were too high.
“If you wait until the last 10 days of escrow and find out that the amount has doubled or tripled, it impacts the price of your home and puts you in a crisis situation where you can no longer afford to buy a home.” says Perry. Said.
California’s housing crisis is currently hitting the real estate market. Currently, one in seven real estate agents say they have lost a deal because a prospective buyer was unable to find home insurance. NBC Bay Area’s Hilda Gutierrez explains.
Even many of those who did find insurance had trouble finding it.
About 31% of their customers have difficulty getting insurance, up from 16% last year, real estate agents said.
Perry said data shows that location is a factor, with rural areas and holiday homes having a harder time getting insurance about half of the time due to potential fire and flood risks.
But homes for sale in the city also faced challenges.
Almost half said their insurance premiums were too high, and a further 30% said they faced difficulty even getting a quote.
“Most people who live on hillsides or in rural areas, insurance companies are looking at all of that, so if you see a tree floating above your roof, they’re looking at your roof. They’re looking at what’s going on around your property,” Perry said.
In addition to decreased sales, Perry said insurance issues can also cause closing delays and, in some cases, force sellers to make expensive renovations.
He added that he encourages customers to combine home insurance with auto or life insurance to get lower premiums, or to look for out-of-state insurance as a solution.
