Just what local house hunters need: another insurance headache.
A new report estimates that 27% of Southern California’s home sales could be at risk of closing delays as the U.S. government shutdown halts buyers from getting protection from the nation’s flood insurance program.
My trusty spreadsheet examined a report from HomeAbroad that combined stats from the National Flood Insurance Program and Redfin to approximate how many home sales might be slowed while the federally controlled insurer temporarily halts new policies.
By this math, Southern California’s six counties had a potential 3,300 of the 12,200 typical month’s sales requiring flood insurance. That’s 27% of all purchases facing a significant hurdle.
If you think that’s ugly, consider the nation’s 150 most-active county housing markets. They have an estimated 67,500 sales at risk of delay due to missing flood insurance, or 42% of all purchases.
Ponder the statewide pattern. All of California has 6,900 monthly sales at risk, or 30%. That’s just the 28th highest among the states.
Then consider the state’s two economic rivals: Florida has 16,000 sales at risk, representing 54%, the ninth-highest share. And Texas has 9,900 at risk, or 40% – No. 17.
When a home in a flood zone is being bought with a mortgage, lenders typically mandate flood insurance to close the sale. With NFIP offline, buyers might consider harder-to-get and pricier private insurance. Or they may have to wait until the end of the political battle that led to the federal shutdown.
It’s not California’s only house hunter insurance headache, too. Fire protection has not only become expensive, but it’s also hard to get in high-risk neighborhoods.
Here’s how widespread home sales delays might be in the six local counties, ranked by estimated share of deals facing potential delays…
Ventura County: 240 monthly sales at risk – or 43% of all sales, the 66th highest share of the nation’s top 150 markets.
Los Angeles County: 1540 sales at risk – or 36% of sales (No. 86).
San Diego County: 540 sales at risk – or 25% of sales (No. 117).
Orange County: 370 sales at risk – or 19% of sales (No. 132).
Riverside County: 390 sales at risk – or 19% of sales (No. 132).
San Bernardino County: 270 sales at risk – or 17% of sales (No. 138).
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com