California’s insurance crisis is rattling the real estate market. It could impact ‘almost every sale’

The landscape of home insurance in California has shifted drastically in recent years as insurance companies have been pulling out of the state. In the past, home insurance was not a major concern during the home-buying process. Buyers would only start looking for insurance after having their offer accepted, as it is a requirement for obtaining a mortgage.

However, with the current turmoil in the insurance market, some sellers are experiencing buyers backing out of deals due to the high cost or unavailability of insurance. On the other hand, buyers are now scrambling to secure insurance preemptively, resorting to making all-cash offers or even deciding not to purchase homes at all.

According to David Russell, a professor of insurance at CSU Northridge, homeowner’s insurance used to be a minor expense depending on the location. But now, the landscape has changed, and the cost and availability of insurance have become significant factors in the home-buying process. The shifting dynamics in the insurance market are impacting both buyers and sellers in California.