Insurance Crisis Could Spark Housing Market Crash

 





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  Insurance Crisis Could Spark Housing Market Crash

Introduction: Insurance Crisis and Housing Market

The insurance crisis could spark a housing market crash worse than 2008. That's what this report says in Newsweek. Some serious issues are going on with insurance. And many states in the United States due to natural disasters, fires, wildfires, and hurricanes, this article goes in-depth about what's going on the financial side and why insurance companies are backing away.


Insurance Companies' Dilemma


Now, look, I get it. It's a for-profit company. And why would they invest in it if they're losing money in a certain area? If you have a company, if you have five companies and one of them's doing bad, you would kill it off. If you have retail stores and you're a big, huge box retailer, and it makes more sense to go just online, you would kill off all the stores.

I get that. 


Impact on Homeowners and Lending


Insurance is a requirement for lending. It's mandated, by law that you have to have insurance if you're carrying a loan on that home that you're trying to buy, or if you're a homeowner. Insurance companies are in a problem when a natural disaster happens, and it happens over and over again in a certain area Insurance companies are backing away. 


State and Federal Insurance Issues


Now, I think this becomes a national problem not just a state problem. And I would say if Trump is cutting the fat off the government, he should also take a look at the Department of Insurance.


There's probably a federal Department of Insurance because we have a National Association of Realtors and we have a Department of Education. We've got to have an apartment of insurance and have him. Have this doge thing stick. I don't care if you like it or not. It's not really to the point since we're changing a lot of things.


Let's change the way we insure houses. Let's change the way the U S uses the real estate market. The real estate industry is part of their GDP, which is an important part. Even though it's like 3%, it's a huge part of our GDP. And if it crashes, it could lead to other things like right now, the automotive industry is hurting pretty bad. 


They're having a hard time selling new cars. More people are electing to buy used cars because. They're just out of step with affordability. I agree we have to look at affordability for housing as well. But part of that is insurance. 


High Fire Zones and Insurance Costs


Now, if you live in a high fire zone, We have CalFiree and they have this little map that shows you if it's in a high fire or moderate fire zone.


If it's in that zone, you have to go to a fair plan, which means your insurance goes up incredibly high, like three or four times higher. Depending on your house, it's crazy expensive and most states have a fair plan, something like a fair plan in California, Or the general carriers won't do it. It won't ensure your house. You can't get a loan unless you get a fair plan, which makes it less affordable. So I think there needs to be an investigation into what's going on and put some common sense tactics into the insurance industry for this because I have a deal.


Hanging on another buyer trying to sell their house, but their house is in a fire zone and they're finding it hard to find insurance. They have to go to a fair plan. So it really is hurting everybody on the bottom level and ultimately it hurts the sellers because they're just waiting to sell their house.

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It's a pain in the butt. Now, if you're in a suburban area, you're not in the hills, you're not in a fire zone. 


Case Study: California's Fire Zones


It's pretty much normal, but if you're in a high fire zone, and there are a lot of places in California that are in a fire zone, I'll break this open for you. Everything is yellow, orange, and red. Higher fire zones. Like right here, this is what we saw go up in flames in the last couple of weeks. That's the Palisades, et cetera, area. And here in our Valley along the Hills are all orange and red fire zones. Los Gatos, Saratoga, Montessorino, and even parts of Cupertino are in high-fire zones, which makes it more expensive for people to buy.


If you can afford a 5 million house, you can afford a fire plan. But if you're in. Watsonville. selling the same style house, which is large, gorgeous, beautiful, everything. But they're in a fire zone. That means your insurance, is going to cost about a million dollars versus 5 million. It'll be less expensive, but people will go there and say, I'm not going to pay for fair plan.


That's ridiculous. So it puts a hold on it for my listing over here. We do have a listing up here in San Jose. I have 69 views on the disclosure. So I'm not worried about that one. It's crazy how crazy it is. But like my hill that I hike on here, that's in a yellow zone. It's not good. That's moderate, but still, it puts pressure on the insurance company and the insurance company's only way to protect themselves is to do a fair plan or not allow it.


And if you're in that place and in that area, that's a high fire zone your insurance company kicks you out. What are you to do? You have to go to a fair plan. That's not so fair. I think federally, we have to take a look at this because If nothing's done, it could spur a market crash.


 


Real Estate Listings and Market Trends


If you're thinking about selling your home, get your honey-do list, We actually do something called an NHD, natural hazard disclosure. So it'll tell you if you're in a fire zone and every insurance company has its own fire map. So don't look at that as gospel.


Home Inspection CHECKLIST HERE https://abitanogroup.com/homeinspectionchecklist

Just take a look at it and make sure you know what you're doing, download that inspection checklist. Mira Vista Road, 


Cupertino Home of the Week

Cupertino house of the week, not my listing 3. 5 million, four bedroom, two and a half bath, 2, 300 square feet. Single story. It's nice. My house is 2, 300 square feet built in 1968.


And it's only worth like a million and a half, 1. 8. So crazy, right? It's a Blackberry farm right here. Mona Vista and De Anza it's right here.


So that's where it is. You go down into the ravine and up the hill, and then you can get into this house right here. Let's take a look at it Wow Original everything. Look at that kitchen screaming original Monte Vista park Nice that they actually did A floor plan looks like they converted the garage into a bedroom. So originally it was a two-bedroom. Now they're calling it a three-bedroom. No, it's just a carport.


All right.

Willow Glen Home of the Week

Zero garage. 3. 6 million dollars. 3. 5 million in no garage. Willow Glen house of the week. Not my listing. Merle Ave, three bedroom, two and a half bath, 1765 square feet built in 1936. It is within walking distance of Lincoln Ave. Real nice. Let me break this open so you can see it a little bit bigger.


Spanish Revival Cottage. Semi updated. This is older. I want to say these cabinets are about 20 years old. That's the style. Nice that they put in the little insets there.


You got your wine bar. A nice little courtyard with an open-up garage. It's not a garage. Might have been a garage at one time, but that's an entertaining center and an outdoor one. Barbecue entertainments. This is nice guys. This is really nice.


There are your three bedrooms, your living room, porch, and dining room. Where's the entry? Oh, that's your entryway right there. Then you go into the dining, and breakfast nook. I have a question. What are your thoughts on having a formal dining room? If you have a 1700 to 2000 square foot house, do you need to have a formal dining room?

Luxury Home of the Week

Because hardly anybody ever buys or uses their dining room anymore. Think about it. Broadway. Not my listing. Only 32 million dollars. And the reason why I chose this is because it's in San Francisco. It has four bedrooms, six and four half baths, and 10, and 000 square feet built in 1987. Look at that view.


That is gorgeous. This is a beautiful house. Look at this. There's a movie with Michael Douglas and Sean Penn. It reminds me of this house.


Oh, I got to show my client this house. It's nice.  


Bay Area Sales Report

And then 12 Bay area sales report, nothing super crazy to report other than Santa Clara County reached over a billion dollars in six weeks and sales. Our demand here in the Silicon Valley is huge. And it shows it right there.


Look at San Mateo. It's half of where it is, even though their houses are more expensive on average. The volume in Santa Clara County is crazy high, but also I want to point out that Contra Costa County is jumping up 621 homes in contract already year to date, and they're 18 percent over list price. 


3 million versus 2.3 million, but Contra Costa, it's the place to go, right? I always pointed out Napa because it was very costly and you can buy a house 5 percent off on a discount. Still is. It's pretty much been that for the last couple of years. Napa is more like a second-home place. There's not a lot of industry there outside of the vineyards.


Monterey is doing really well. They only had 18 sales this week. Monterey County, look at that 1. 4 million, no change in list price to sales price ratio. So far there's only 258 a quarter of what Santa Clara County has.


But that's also. Different because Monterey is more like a destination place. It's a resort, a second home vacation type place. There's no major industry other than tourism There's golf sports, and Santa Cruz is doing really well. And 1. 4, 95 percent off the list price, only 200. So there's a little bit of scarcity there too.


Thanks for watching. I'm Vito with Abitano. We'll see you out there.




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Vito Scarnecchia

Real Estate Broker, Veteran, Dad

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