California’s lofty home prices and scarce inventory already amounted to one of the most nightmarish housing markets in the US. Now, challenges securing and affording home insurance in the wildfire-prone state are making it even worse.
That’s because premiums are so high – up 55% across the US from five years ago, according to a Guaranteed Rate report – that they eat up money in a household budget that could otherwise have gone to a mortgage payment. Just before closing, he finally found a plan he could live with — but not without stress along the way. His premium is about $10,000 a year — and could be subject to a rate increase down the road.
At Nation One Mortgage Corp., Phil Crescenzo Jr. says he has brought in a surveyor, insurance broker and real estate attorney for “lunch and learn” sessions to educate his loan officers and other staffers on the issue, in effort to help them navigate the complexities of the insurance turmoil. Their clients, after all, are already facing the burden of elevated borrowing costs and inflation that has yet to be fully tamed.
The insurance situation only adds to the challenges. In 2024, almost 6% of US homes, valued collectively at $3 trillion, “face severe or extreme risk of fire damage,” according to Realtor.com. About 39% of these wildfire-prone properties are in California and they’re worth $1.7 trillion.