American Pacific Mortgage

American Pacific Mortgage

Tuesday, February 13, 2024

SUPERBOWL and SWIFT Insurance Changes!

I had to get a comment in about the increase of younger women, “Swifties” watching the Superbowl.  Wow!  What a great game, a nail-biter up to the end!  And the half-time show was entertaining!  Of course I am an Usher fan.  We watched the game at Dana Point Yacht Club, here is the sunset view.

Rate and Market Updates

Rates have crept back up near their highs.  The next move down will depend primarily on the CPI figures coming out this week.   If inflation is decreasing, we should see a reduction in the Fed rate sooner than later.  If not, we may be waiting for June before we see any appreciable change.

Regardless, activity is definitely picking up, with many coming off the sidelines when rates started their drop at the end of last year. To quote a local Real Estate professional, “Stop holding your breath waiting for prices to fall.”  They won’t, barring a National or International Disaster.

Baby boomers are not selling their homes and, for the most part, are not moving.  So, get into the market if you aren’t already, any way you can, even if you have to buy an investment property and/or combine forces with a friend or relative.  Don’t wait for your dream home or you may be priced entirely out of the market here in California.

Insurance Woes

In case you have not heard, we have an insurance crisis.  Insurance costs are rising dramatically for homes, cars and more.  A number of carriers have stopped writing insurance on homes in California, or pulled out of our market altogether.  This means many homeowners have had their policies cancelled by their carriers, and find they now have to resort to the “Fair Plan” provided by the State, with an additional “wrap” policy.  These are all expensive! 

Why is this happening, may you ask?   Well, fires, floods, and earthquakes.  Climate change is bringing more frequent and more serious weather events.  The number of weather-related disasters have risen dramatically in the US over the past 20+ years.  Insurance companies are losing money, and they are for-profit enterprises. 

So far, the companies that have exited or stopped writing new policies include The Hartford; State Farm, Allstate, Farmers, Kemper, and USAA.

Auto rates are climbing as well, primarily due to high costs to repair autos. 

What does this all mean?  Well, it has a rather dramatic effect on home affordability if your insurance premium is double or more than initially expected. Lenders require insurance and it is not wise for anyone to go “bare” without insurance, even if you don’t have a loan on your property.

We have to remind our clients to get busy contacting agents to get insurance in order ASAP,  or it can and will slow down closings.

However, if you think it is bad here, take a look at Florida.  There, many homeowners are being forced to sell as they can’t afford the enormous increase of their insurance policiy.  Others are paying off their mortgage and going “bare” so they don’t have to pay giant premiums where policies have doubled or tripled due to hurricanes.

If you need help with insurance, reach out!  We can help!

We are looking forward to Spring!

Karen, Katie and Stephanie