A growing number of California real estate agents are reporting the collapse of transactions because buyers are unable to obtain affordable homeowners’ insurance.
A new survey by the California Association of Realtors membership found 13.4% of respondents admitting at least one of their transactions fell out of escrow this year due to insurance challenges, up from 6.9% in 2023. Among the reasons on what went wrong, nearly three-quarters of the situations (74.7%) involved insurance not being available to borrowers while 17.8% involved premiums being too high.
Furthermore, 21% of realtor respondents said they had clients who are using the FAIR Plan, California’s insurer of last resort. Only three years ago, FAIR Plan policies accounted for roughly 3% of the total market.
Earlier this year, a data report from Redfin (NASDAQ: RDFN) found one in nine California respondents (10.7%) were dealing with insurance companies that stopped offering coverage for their home – in comparison, the national share of homeowners who recently lost coverage was 8.3%. California homeowners also reported a higher rise in their insurance costs versus the national average.
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