Marin County Homeowners Insurance Premiums

Homeowners insurance costs and ratings are effecting the real estate market here in Marin County. Our experience is it is effecting those buyers more who must utilize financing to purchase. We have not seen cash buyers be concerned with the cost of the insurance itself, however, they have expressed concern related to areas which are considered higher fire risks. The cash buyers we have worked with recently, often are avoiding higher fire risk areas. The higher the insurance premium is inhibiting what some buyers can afford, as it pertains to their overall debt to income ratio and purchasing power. DTI or the "debt to income" ratio being the accounting lenders use for qualifying purposes. 

The photo shows the breakdown for insurance costs across the US. It was interesting to me that California's premiums were lower than many other states per Freddie Macs findings. I was expecting us to be rated more negatively. The reason being I have seen so often these last three to four years where insurance premiums are 7 times as much as would have been priorly. We recently had a buyer pay $11,756 for an annual premium on a home in Novato. An insurance contingency is often a must have for many properties, whereas three years ago you never saw them written into offers. 

Please also be aware that insurance companies rate fire risks, it seems to me, based on different criteria than natural hazard disclosure companies or fire departments and agencies do. I have seen a number of cases where a natural hazard disclosure report will not designate a home in a high fire hazard area, but the insurance company will. 

On a side note, but still related to insurance. Zillow and Redfins reporting of flood insurance has been found to be wanting by many. Deirdre and I recently had a listing where it stated the property was in a high flood risk area, but the area had never flood and the home was on a knoll top. We have a colleague with a listing in Fairfax who is involved in situation where Zillow is representing the property is in a high flood zone, but again the area has never flood. The misreporting here, is actually financially hurting the seller. In both these instances a lender would not require flood insurance to lend on the home and FEMA was not noting flood insurance as being required. We are hearing of many other situations similar to these. I suspect we will begin to see litigation behind this in the near future.