What do you mean you won’t approve my mortgage if I don’t have homeowners' insurance?

Photo above - triple threat. Which will happen next: house tumbles into the sea; burns down from a natural gas link, or an earthquake splits it in half?

Normally, I diss California politicians as having the attention span of a butterfly, and only being concerned with the next election. But this time they might actually be onto something.

California is a unique place to buy a home in America. It may be the only place that has coastal erosion, wildfires, and earthquakes as existential risks. Sometimes all 3 on the same plot of land. State officials (and the Federal Government) are justifiably weary of providing emergency services to people who demand scenic views many miles away from the local fire department or dangling off some clifftop overlook.

Last year 13% of all California home sales were cancelled because the buyer was told “no, you can’t just say that you’ll take care of the insurance later”. See link below.

I would complain that this is a pain in the ass for people seeking affordable housing, but I doubt if Amazon baristas and Uber drivers are the ones angling for California’s ocean views and inland empire rural farm-ettes.

Lots of home insurers are fleeing California, because of the natural disaster hat trick. Those that remain are jacking up rates to the moon. Some analysts say there was a 40% insurance rate rise in the past 12 months alone. Wanna bet some existing homeowners are just going to let it lapse, and think about it later? In that case, those (evil) banks have the right to impose their own insurance coverage, at costs that probably far exceed what Duane the Database Administrator would be able to get on his own.

Whether you get socked with a bank insurance premium, or have your rates go up 40% annually and try to tough it out, the net result of this is going to be mortgage defaults, and evictions. Followed by lower prices on the vacant properties.

We saw this on the east coast in 2008, during the housing crisis. Prices plummeted, vacant homes, began to rot away, and were vandalized. Squatters moved in. None of these scenarios incent builders to construct NEW affordable housing, of course. But it’s an object lesson to overextended slicks who think they have a right to own top tier homes, German luxury cars, and dine out 5 nites a week without doing the math.

I’m just sayin’ . . .

There's a new deal-breaker in California real estate purchases