California Wildfires Push Insurance Crisis to 'New Level'

 




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 California Wildfires Push Insurance Crisis to 'New Level'

Introduction to Insurance Issues

 I'm still trying to figure out how all this insurance will play out. It's going to screw all of us in California, not just in California, but across the United States because everything is getting more and more expensive to rebuild. And the way they figure out the premiums is based on today's numbers. They don't put into future costs. Every time I think about this, it frustrates me more and more because the insurance companies really don't care about you, It's a business and when they're at hundreds of thousands of people, they can't really care about your particular plight.

They have customer service people hired to do that, but they're also designed to make sure that they give you as little money as possible. That's not really what this is about. 

Understanding the Fair Plan

This is about what's going on with insurance. We have something called a fair plan. Out of all the States, 32 States have fair plans. If the regular insurance carriers won't offer insurance on your house because you live in a fire zone, you can go to the fair plan based on the state the insurance department requires all insurance carriers to push money into this pot.

This isn't part of your regular premiums. So state farm Geico, AAA, you name it. They're all putting money into this if you look at the fire map of California, Everything in red and orange and yellow is where the fire plan sits.

If you're in the middle of the Valley or middle of the Santa Clark County Valley, you don't have to worry about it too much. I remember distinctly when the Oakland Hills went up, I was here in San Jose you can blame policy. You can blame the governor.

You can blame the smell. You can blame all this other stuff. The problem is it's here. The problem's here. We don't have anything we can do to fix this problem. We don't have any way out. 



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Challenges and Solutions for Fire Zones

Insurance commissioners putting a moratorium on cancellations, meaning that they're putting the feet to the fire for the insurance carriers, making sure that they ensure these people that are losing their homes, this whole area in red is up in flames right now. Or has burnt down, There's got to be a better way. Maybe it should be better land management. Maybe it should be, homes further apart. Maybe it should be, what, I owned a cabin in the Sonora area years ago and the fire marshal or the rangers would come around and say, you need to pick up that defensible space, There's a lot of stuff that's not being done, I think. Yes, there's somebody that's going to be to blame. A whole bunch of people are going to be to blame. But right now, I would say they're going to figure it out. Let's not worry about who to point fingers at. Let's go out there and try to help these people.

And understand that there's got to be a balance. A group of people that want to try different things to see how defensible your house can be. Cause I've seen reports and videos on TikTok about houses with sprinklers on the roof and they didn't burn down Wouldn't that be great? Maybe that's just a simple answer, but how do you, so the problem is the state, the government, and I don't care what level of government, I don't care what side you vote on.

It's the government. It's all based on levels of this is how we have always done it. I think now's a great chance for us to really put our foot down and say, stop doing what you used to do. This is the new way we have to try things. And yes, it's an experiment. We might be completely wrong, but let's try it anyway.

There you go. 

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Real Estate Market Insights


Tuesday, Los Gatos. House of the Week picks specifically because it is in the fire zone. See right there. Fire zone $4.89 million. Would you risk $8 million on a house that's in the fire zone knowing that you're gonna have to pay a fair plan?

If I had that kind of money, I would be able to create a defensible perimeter and make sure that I had water reserves and battery backup that could pump sprinkler water all over. Four and a half baths. And I'm right down the street from walking distance.

It would be horrible if it actually burnt at this Los Gatos, but guys look how kindled this place is. It's ready to go. It's like a powder keg. 

Analyzing Property Listings
Los Gatos Home of the Week

This is a list price decrease for the week. Four bedrooms, two baths, 1500 square feet, built in 1960.

This is not my listing and it's over in the Mount Pleasant area. Othe n market for 40 days, they dropped it from 1. 367 down to 1. 32888, which means that the seller's getting pissed off at the agent because their agent's not doing what they're supposed to be doing. But you know what? It's really about the price. 

3 million for this home. In this area today is not a value. It needs to be about 1. 2 to attract the buyers period. Otherwise, you're just waiting for the market to come to you. You have to attract the market and the way to attract the market is you have a nice house like this and after 40 days, you've overpriced it.

You better lower it and get it sold, right? This house is worth 1. 2 right now. I don't care what it looks like. I don't care how much they put into it. The fact that it's been on the market for two, almost two months, okay, a month and a couple of weeks. It's nice. It looks like it's completely dialed in. I hate the AstroTurf, but that's me.

There's an ADU, and I think that's included in the bedroom count. Kitchen, living, dining, covered patio, primary bedroom.

Where's the other bathroom? Oh, There it is. It's the front of the house a studio. It's not a kitchen that's misleading, And I guess you could drop the ADU, right? It used to be a garage. That's why it's not selling because you don't have a garage. This is really a three bedroom. They converted the garage into an ADU and they're pricing it like a four-bedroom agent.

Sometimes you just have to say no.

Where's the garage?

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Let me find it. There it is. Two space garage. I don't see it. That's not a garage.

When you're doing, stuff like that, you got to make sure you know what you're talking about because you either have a garage or you don't. And this one does not have a garage. This is the garage. It was converted. So it's really a three-bedroom. And that my friends is why it's not selling.

Some would call it lying. Some would call it politicking. Some would call it marketing. 

Video: 2025 Housing Crash Predictions






Market Trends and Final Thoughts

Santa Clara County High's and Low's

The highest sold price in Santa Clara County is 10. million, 70, Guys, I'm telling you, I've been telling you this for the last two months. This is the time to make some serious deals. Criteria sold zero to. 30. Let's see how many sold 432 souls. And let's see the last few, look, 80 percent off the original list price, 85 percent off the original list price, 75 percent off the original list price, 88 percent off the original. Yes. Some houses are going to sell for lower than the list price. I can almost tell you that's a great deal. If you can get it for about nine 50,

there's 1. 3 to eight That's called hanging on a prayer. What are the ones here? 86, 87 percent off list price. It's normal to see that kind of stuff. When you overprice your house, you're going to see this happen. It doesn't matter what market you're in. It doesn't matter what season you're in. It's always going to happen. We look at houses that have been on the market for a long time. We go in and say, obviously, you overpriced it based on condition, location, and market. Let's get to brass tacks. Here's what we're going to do. And then we negotiate. This happens all the time, guys.

It's not abnormal for us to see this. You should do this. If you're looking at buying.
All right, the lowest sold price is 520, 000. Yes. It was a two-bedroom, 976 square house, but just imagine, what does that look like? It's a street. You're giving me pictures. Oh, it's on a corner lot There it is. Corner lot. That thing's a piece of crap. That's really like a potion stamp thing.

Jeez. I feel like I'm in a Warner Brothers cartoon. It's ridiculous. You gotta tear that thing down, dude. I don't care. All right. And then the highest for sales, the one in Vida Real, and then the other one up in the mountains that takes you an hour and 40 minutes to get to. I'm gonna start looking at some other ones.

Inventory's increasing and price reductions are decreasing, so that's great. Look at the last couple months, we're at 20%. One dropped at 16, but we're averaging 19% here now we're down to 12%, so things are starting to pick up. Buyers are back in the market, but not at the same level as 21. I think we're gonna see more listings.

All right, that's it for now. Thanks for watching. I'm butyl with Avatana. We'll see you out there. Bye



Vito Scarnecchia
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