Ever-increasing homeowner insurance rates are not only affecting family budgets, but also home sales.
For example, an older home north of Interstate 10 in Spanish Fort - elevation 150 feet above sea level - would appear to be a likely candidate for lower rates. Not so, prospective buyers are finding. In fact, they may be shocked to find that they need to be insured through the Alabama Insurance Underwriting Association (AIUA), also known as the "beach pool."
The root cause is that insurers are trying to reduce their liability along the entire Gulf Coast. To do that, they have constructed parameters on what they will insure and where.
Three Eastern Shore insurance agents whom I contacted agreed to tackle a couple of questions to try to explain: They are: Lad Drago Jr. of State Farm; Glen Gorowsky with the independent Gorowsky Group; and Matt Malone of Malone Insurance, which sells Farmers Insurance. Each agent also sells other insurer's products.
Q: Since insurance cost is a consideration in a house purchase, what type of house, what age and what location will get a buyer the best rate?
A: Drago: Newer, brick homes will always get a lower rate than frame or older homes. Homes located in north Spanish Fort (north of Bay Minette Creek), Stapleton, Loxley, Silverhill, Robertsdale and north Foley are going to get lower rates and can be written through State Farm with wind coverage included. My team will map the homes and let the buyer know what to expect. Homes in southern Spanish Fort, Daphne, Fairhope, and Point Clear can be written through State Farm with AIUA for the wind.
Gorowsky: This has been a moving target and has just changed with the last major insurer (Farmer's) now not writing in Spanish Fort or Daphne.
The main consideration is distance to the water. From U.S. 98 west is the most expensive; going east of it drops as the carriers' exposure drops.
Older homes still rate well, but could experience a rate surcharge if the roof is older than 20 years. When shopping, make sure you know how old the roof is, or when it was replaced.
Malone: New house Fairhope 2006 or newer. The Loxley, Silverhill, Robersdale and Foley are still good (if they are built no later than 1995). 36526 (Daphne) and 36527 (Spanish Fort) are out (with Farmers). Fairhope is 2006 and newer. We have current contracts with Geovera, Lexington, Foremost (owned by Farmers) AIUA (beach pool).
Q. What options do homeowners have if their insurance is so high that they are having trouble paying for it?
A: Malone: I hear that a lot. It's sad. I hate it. They could maybe downsize. ... Some folks that own their home are self-insuring the wind. I do not advise this.
Drago: The only advisable option is to increase their deductibles. By taking on more personal risk through increased deductibles, a customer can reduce his annual premium. State Farm also gives a substantial discount to homeowners who also have their cars insured with us. Finally, if a person is purchasing an older home that has been completely updated (electrical, plumbing, and AC) they may qualify for a 35% Utility Rating Discount on their premium.
Gorowsky: Shop it. At times certain Lloyds of London syndicates offer outstanding rates, but once their quota is written, it goes away until a new quota is offered. New insurers are rumored to start writing in the next 3-6 months.
Contact information:
Ever-increasing homeowner insurance rates are not only affecting family budgets, but also home sales.
For example, an older home north of Interstate 10 in Spanish Fort - elevation 150 feet above sea level - would appear to be a likely candidate for lower rates. Not so, prospective buyers are finding. In fact, they may be shocked to find that they need to be insured through the Alabama Insurance Underwriting Association (AIUA), also known as the "beach pool."
The root cause is that insurers are trying to reduce their liability along the entire Gulf Coast. To do that, they have constructed parameters on what they will insure and where.
Three Eastern Shore insurance agents whom I contacted agreed to tackle a couple of questions to try to explain: They are: Lad Drago Jr. of State Farm; Glen Gorowsky with the independent Gorowsky Group; and Matt Malone of Malone Insurance, which sells Farmers Insurance. Each agent also sells other insurer's products.
Q: Since insurance cost is a consideration in a house purchase, what type of house, what age and what location will get a buyer the best rate?
A: Drago: Newer, brick homes will always get a lower rate than frame or older homes. Homes located in north Spanish Fort (north of Bay Minette Creek), Stapleton, Loxley, Silverhill, Robertsdale and north Foley are going to get lower rates and can be written through State Farm with wind coverage included. My team will map the homes and let the buyer know what to expect. Homes in southern Spanish Fort, Daphne, Fairhope, and Point Clear can be written through State Farm with AIUA for the wind.
Gorowsky: This has been a moving target and has just changed with the last major insurer (Farmer's) now not writing in Spanish Fort or Daphne.
The main consideration is distance to the water. From U.S. 98 west is the most expensive; going east of it drops as the carriers' exposure drops.
Older homes still rate well, but could experience a rate surcharge if the roof is older than 20 years. When shopping, make sure you know how old the roof is, or when it was replaced.
Malone: New house Fairhope 2006 or newer. The Loxley, Silverhill, Robersdale and Foley are still good (if they are built no later than 1995). 36526 (Daphne) and 36527 (Spanish Fort) are out (with Farmers). Fairhope is 2006 and newer. We have current contracts with Geovera, Lexington, Foremost (owned by Farmers) AIUA (beach pool).
Q. What options do homeowners have if their insurance is so high that they are having trouble paying for it?
A: Malone: I hear that a lot. It's sad. I hate it. They could maybe downsize. ... Some folks that own their home are self-insuring the wind. I do not advise this.
Drago: The only advisable option is to increase their deductibles. By taking on more personal risk through increased deductibles, a customer can reduce his annual premium. State Farm also gives a substantial discount to homeowners who also have their cars insured with us. Finally, if a person is purchasing an older home that has been completely updated (electrical, plumbing, and AC) they may qualify for a 35% Utility Rating Discount on their premium.
Gorowsky: Shop it. At times certain Lloyds of London syndicates offer outstanding rates, but once their quota is written, it goes away until a new quota is offered. New insurers are rumored to start writing in the next 3-6 months.
Contact information:
What's happening in the big wide world of real estate and finance these days?
The answer is way above my pay grade.
Locally, I can tell you it's a good time to buy. Lenders have money, the interest rate is very good and there are plenty of houses for sale.
If I could figure out anything more for our future, George Bush would be painting my toenails while Larry King interviews me in my living room.
Here's what did happen in the last quarter before the collective Freak Out over The Bailout, The Market and The Election.
Price corrections in the Eastern Shore housing market produced mixed news in the 3rd quarter: The number of homes sold rose over the previous quarter, but sellers took on average 5% off their list prices to make the deals happen.
Buyers gravitated to foreclosures, which represented 6% of sales, and to new construction, which accounted for 35% of sales. Yet of the 1,229 homes on the market from Spanish Fort to Point Clear, foreclosures make up only 2% of the listings, and new construction, 25%.
July was the hot month, with sales decelerating in August and September. Still, 265 homes sold last quarter compared with 227 sales from April through June. Average sales price fell slightly from $308,019 in the 2nd quarter to $298,974 in the 3rd quarter.
The number of homes currently under contract has fallen from around 110 for the last couple of months to 88, which reflects the lack of activity in the last few weeks.
This is a no-nonsense market: The houses in the best shape at the very best price are the ones that are selling.
Let's break it down:
Fairhope/Point Clear: 98 homes sold, up from 76 in the 2nd quarter and but down from the 105 that sold in the 3rd quarter of 2007. Average sales price was $359,262, down from $415,410 in the previous quarter. On average, sellers took on average 6% off the list price and the sales time stood at 200 days. There are 593 homes for sale.
Daphne/Montrose: 105 homes sold, up almost 40% from 65 sales in the 2nd quarter of this year, but down from 113 in the 3rd quarter of 2007. Average sales price was $289,832, down from $311,085 in the 2nd quarter of this year. Average selling time was 150 days. There are 374 homes for sale here.
Lake Forest: 28 homes sold, down from 36 in the previous quarter, and 38 this time a year ago. Average sales price dropped from $165,105 in the 2nd quarter to $153,965. Average days on market 144. There are 129 homes for sale here, a number reminiscent of the late ‘90s.
Spanish Fort: 34 homes sold, down from 40 homes in the 2nd quarter and barely down from the 35 that sold in the 3rd quarter of '07. Average sales price was $272,853, up from $268,372 in the 2nd quarter. Sellers took on average 4% less than list price. Average days on market: 169. There are 127 homes on the market. here, a new high.
For more information about real estate in Daphne, Spanish Fort, and Fairhope, please contact Janet English, RE/Max By The Bay, 251 591-2411
What's happening in the big wide world of real estate and finance these days?
The answer is way above my pay grade.
Locally, I can tell you it's a good time to buy. Lenders have money, the interest rate is very good and there are plenty of houses for sale.
If I could figure out anything more for our future, George Bush would be painting my toenails while Larry King interviews me in my living room.
Here's what did happen in the last quarter before the collective Freak Out over The Bailout, The Market and The Election.
Price corrections in the Eastern Shore housing market produced mixed news in the 3rd quarter: The number of homes sold rose over the previous quarter, but sellers took on average 5% off their list prices to make the deals happen.
Buyers gravitated to foreclosures, which represented 6% of sales, and to new construction, which accounted for 35% of sales. Yet of the 1,229 homes on the market from Spanish Fort to Point Clear, foreclosures make up only 2% of the listings, and new construction, 25%.
July was the hot month, with sales decelerating in August and September. Still, 265 homes sold last quarter compared with 227 sales from April through June. Average sales price fell slightly from $308,019 in the 2nd quarter to $298,974 in the 3rd quarter.
The number of homes currently under contract has fallen from around 110 for the last couple of months to 88, which reflects the lack of activity in the last few weeks.
This is a no-nonsense market: The houses in the best shape at the very best price are the ones that are selling.
Let's break it down:
Fairhope/Point Clear: 98 homes sold, up from 76 in the 2nd quarter and but down from the 105 that sold in the 3rd quarter of 2007. Average sales price was $359,262, down from $415,410 in the previous quarter. On average, sellers took on average 6% off the list price and the sales time stood at 200 days. There are 593 homes for sale.
Daphne/Montrose: 105 homes sold, up almost 40% from 65 sales in the 2nd quarter of this year, but down from 113 in the 3rd quarter of 2007. Average sales price was $289,832, down from $311,085 in the 2nd quarter of this year. Average selling time was 150 days. There are 374 homes for sale here.
Lake Forest: 28 homes sold, down from 36 in the previous quarter, and 38 this time a year ago. Average sales price dropped from $165,105 in the 2nd quarter to $153,965. Average days on market 144. There are 129 homes for sale here, a number reminiscent of the late ‘90s.
Spanish Fort: 34 homes sold, down from 40 homes in the 2nd quarter and barely down from the 35 that sold in the 3rd quarter of '07. Average sales price was $272,853, up from $268,372 in the 2nd quarter. Sellers took on average 4% less than list price. Average days on market: 169. There are 127 homes on the market. here, a new high.
For more information about real estate in Daphne, Spanish Fort, and Fairhope, please contact Janet English, RE/Max By The Bay, 251 591-2411
Condo for sale at 4 Yacht Club Drive, Daphne, Alabama, 36526, Unit 208
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