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Housing Market Trends in California

The way you feel about the housing market in California is likely to depend on whether you’re already a homeowner or someone looking to buy one someday. It’s still a seller’s market in the Golden State, and the remaining market challenges make it more difficult to buy here than in most other U.S. states. 

Homeowners insurance can be another financial challenge we’ll explain here as we look into some of the key housing market trends in California. 

Let’s get started! 

We’re Still (Almost) Number One 

California has some of the highest housing costs in the nation. Only Hawaii has higher median home sale prices than the typical California sale price of $816,804. However, our state’s “We’re number two!” slogan doesn’t feel much like a boast unless you already own a home and you’re thinking of putting it on the market. 

The real challenge here is that, while Californians pay almost double the average U.S. home cost, state residents only enjoy a measly 15 percent median income advantage over workers from the rest of the country. That’s why so many residents don’t own their own real estate and are severely challenged in changing that status anytime soon. As for those who do own a home here, their monthly mortgage is a much higher portion of their income than it is most anywhere else nationally. 

There’s Good News/Bad News on CA Home Affordability 

At least things aren’t getting much worse in terms of California housing costs. It’s predicted that home costs will lower — or at least not rise as steeply as they have traditionally — in 2023. Good news, right? 

Ready for the bad? It’s that this relative leveling off of the state’s housing prices has to do with the high inflation rate hitting the country — now at around a 7.7 percent annual increase. That and related factors have raised interest rates on home loans to the highest in decades. That’s why housing costs are leveling off — because fewer Californians can afford to buy a home and make mortgage payments with those high interest rates. 

California’s New Construction Start-Ups Are Lagging 

This is a national challenge, not just one you’ll see in the Golden State. There are various causes for new home construction woes, but, as with a lot of adverse economic news, it starts with the COVID pandemic. 

During COVID, the availability of construction workers dried up. By the time the pandemic lost much of its steam, the challenge became a matter of being able to order and receive construction supplies from overseas. In short, the supply chain has wobbled, and builders and construction suppliers are having a hard time keeping up with demand all across the country. 

Finally, recent inflationary bad news means that building costs have escalated beyond the means of many prospective new homeowners. In California, the state where home costs are already the second highest in the nation, this additional cost escalation is particularly painful. 

Young Asian American girl walks California neighborhoods looking for housing

The Cost of Home Insurance Continues to Rise for Californians 

If you’ve read the rest of the post up to this point, you might not be surprised that home insurance is pricier than before as well. Remember, the cost of your insurance premiums must keep up with the cost of repairing and replacing your home in the event that you’ve made a claim. 

As inflation continues to dent the U.S. economy and the prices of homes and construction materials continue to rise, it’s natural that insurance companies must match those cost challenges by raising the cost of your premiums. 

Then there are the unique weather challenges that hit parts of our state. Consider California’s notorious wildfires, which cause billions of dollars in damages to commercial and residential property annually. A few years ago, it was estimated that 11.3 million Californians live in areas of the state at escalated risk of wildfires. 

Your first challenge in this regard is to make sure your insurance company will even cover wildfire damage

Add to that fire risk the serious drought that has hit much of the state, along with the heightened risk in places for earthquakes and mudslides, and you can see the depth of the natural risks of living and owning a home in this state. 

Finding an Advantage to Home Costs  

Fortunately, there are effective ways to fight back against this high cost by shopping carefully. Don’t get a quote from just a single carrier and assume that this represents what you’ll have to pay for coverage. After all, if you take into consideration the high costs of building or owning a home that you have little or no control over, it makes sense to take any advantage you can. 

Your first, and probably most successful, strategy in finding the most affordable homeowners insurance is to conduct business with an independent agent. 

Many insurance brokers work for a single insurance company. That means they can only sell you what their lone carrier has to offer, whether it’s at the best market rate or the worst. 

Independent brokers, on the other hand, have established contractual relationships with multiple insurers. This means that once they’ve met with you and learned about the home you want to buy and what you can afford to pay for homeowners insurance, they can begin shopping for the best deals from among the several insurers they represent. 

In this way, an independent broker is likelier to be able to find the best coverage at the most affordable rates. You could save significantly. 

Find Affordable Home Insurance in California Today 

At Cost-U-Less Insurance, you’ll find independent agents who can find you the homeowners insurance coverage you need at a price you can afford. Call us at (800) 390-4071 or get a quick quote online. You can also always find a California Cost-U-Less location near you

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