NEW ORLEANS (WVUE) – Rising property insurance costs are causing some homeowners in the New Orleans area to make concessions when selling their homes this spring.
“They will lessen the price of the house or they will have the roof replaced before closing,” said Liz Tardo, owner of NOLA Home Realty and president of the New Orleans Metropolitan Association of Realtors (NOMAR). “We’re seeing a lot of that.”
John Sibley of The Sibley Group at Keller Williams Realty said he agrees.
“In a lot of cases, it involves putting on a new roof,” Sibley said. “That is a big thing that a lot of the insurance companies look for.”
Insurers they say are not eager to write new policies on houses with older roofs in the wake of the catastrophic hurricanes Louisiana has seen in recent years.
“The biggest issue we’re seeing with insurance is, if your roof is an older roof — and by older roof I mean five years or older — insurance companies are very nervous about insuring a house,” Tardo said. “Which seems kind of crazy.”
Higher insurance costs can mean higher monthly mortgages for homebuyers.
“I had a client who had a $90,000 insurance quote for a yearly premium for homeowners, which obviously they could not buy that property,” Tardo said. “When they researched and called every insurance carrier in the city, the lowest quote was in the high ($30,000s). And that was a higher-end property. But people are not going to spend $30,000 a year on homeowners insurance.”
She said it forced the sellers to lower their asking price for the home. Higher interest rates also are impacting potential homebuyers.
“We are seeing rates in the sevens,” Tardo said, referring to interest rate percentages.
Sibley says inflation also is a factor.
“On top of that — inflation — the cost of groceries, you got flood insurance also,” he said.
Sibley said some homeowners are resorting to leasing their property if they face a hard time selling it.
“That does give some relief to those homeowners who are seeing their insurance double overnight,” Sibley said. “If they’re not in a position to sell the property or to remain in it, renting is something some of them are considering.”
The realtors said despite the challenges, sales are still happening and they believe things will improve.
“The good news is that, right now, we’re still seeing homes that are selling, a good bit of activity,” Sibley said. “This has not brought the market to a grinding halt. It is certainly something that is a challenge. It’s a hurdle with every sale.”
Tardo said, “I do believe it’s going to get better. We’ve heard new insurance carriers are coming in the market. We’ve had so many leave Louisiana.”
Sibley urges prospective homebuyers to meet with a realtor and an insurance agent early in the process.
“It’s not hard,” he said. “It’s just accepting the facts of the situation that insurance prices have increased and buyers have to budget for that. We’re seeing that materialize in a couple of different ways, where buyers are having to adjust their price points or they’re having to accept a higher monthly payment once they factor in the cost of insurance.”
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Alice J. Roden started working for Trending Insurance News at the end of 2021. Alice grew up in Salt Lake City, UT. A writer with a vast insurance industry background Alice has help with several of the biggest insurance companies. Before joining Trending Insurance News, Alice briefly worked as a freelance journalist for several radio stations. She covers home, renters and other property insurance stories.