GreenBungalows Gazette: May 2024

Market update, eco-tours, & a potential home insurance solution

Dear friends,

Each year we wait for a that feeling of abundance, when our gardens burst into bloom, and that very much happened this month. And for the past couple of years the real estate market has followed the same schedule. After another year with late rains, May has seen our market coming into full flower with lots of additional inventory showing up. Often when buyers have more choices, offers are spread across the listings, keeping prices from escalating. But that is not how it feels in 2024!

This continues to be a year of extremes, with the most updated, charming and well-located properties attracting extraordinary attention, while more ordinary homes may sit for several weeks. The first part of that sentence is not unusual in this area! It seems I always have buyers with exceptional taste who want those special properties. A set of current buyers were among the 18 who wrote on a property in Berkeley that was the “it” property of the week. Near North Berkeley BART, downtown and UC, it also had been updated by the sellers for their own enjoyment, and that is always a highly desirable aspect. Besides an updated electrical system, A/C, owned solar and a lovely open kitchen, it also had an ADU, developed with permits, located in a fully landscaped and fenced garden. But for a 3 bedroom, 2 bath home, it felt on the small side to my clients to pay more than $2.3M. Looked at by $$/sq. ft, it was about $1330. It felt like a higher result than might have been achieved last year. But perception is not always reality! In the same period of 2023 (single family homes closing from Jan. 1 through May 15) several properties sold at more than $1400 sq/ft, which is higher than any properties have achieved so far this year.

When I looked at the broader numbers for the past two years, the same percentage of total sales are falling in the $2M+ range (~24%) and that was the same for 2021. Only 2022 was an outlier year, with 42.5% of Berkeley homes selling over $2M! In retrospect, I would consider this a direct impact of the pandemic. 

These buyers were struck by how much higher prices feel now, than when they looked at some sold results from last fall. But that’s a tricky comparison too. Sellers who can plan ahead usually want to bring their homes on the market in the spring, not in the fall, so one can argue that the inventory in the spring is of a higher quality.

Besides competition and continued high prices for the best properties, buyers are also facing an insurance environment that steadily worsens. You may be tired of hearing about this, but the situation is likely to get worse still, not better! For the past several months if you have been reading my newsletters you’ve heard various stories about the increasing challenges of obtaining new policies for homeowners insurance as more carriers exit the state.

I’ve shared how quotes on the same home can seem somewhat reasonable from one broker, to more than twice that amount from another, with the quotes coming from different offices of the same brokerage. When the time comes for you to seek a new policy (and sadly, it is happening to most of us!) you will want to seek multiple quotes. If you would like references, I recently received a list of brokers who were new to me, shared by my long-time State Farm agent, who has been forced to issue cancellation notices to me and most of his clients in 94707, among other zip codes. I am happy to share those names, though I cannot personally vouch for them.

Carriers have upped the ante over the past few months, and now insurers are denying new policies, or canceling existing ones for any of these categories:

• Location in a high fire risk zone
• Landscaping that is not fire hardened. The requested changes vary greatly by carrier!
• Density: that’s too many policies within a given zip code or region
• Outdated systems. More about this in the subsequent article

We can all accept by now that being located in a “dense” area, i.e. dense with lots of vegetation that could burn, would be a logical limitation. But that is not the type of density that is the reason given for many cases of non-renewal. Carriers are setting low quotas for the number of policies they will maintain in California zip codes, or exiting the state all together. Each month new carriers join the list of those no longer doing business here.

Were that not frustrating enough, this New York Times article gives a thorough and fairly grim summary of the state of insurance nation-wide (it may be behind a paywall, but worth it!) Carriers have been losing money over the past few years in one third of the US states, while in California carriers have actually only experienced losses in two of the past seven years, unlike in states such as Iowa and South Dakota where losses have been the case in five out of the last seven years.

So while insurance used to be a relatively small and manageable expense per year, we all need to adjust our expectations of what will be required to adequately insure our homes, and how much it will cost. Premiums will undoubtedly be higher. Coverage will likely be less extensive. And many of homeowners who had put off updating systems will now be forced to update key systems that insurers consider as high risk.

In the next article I share some resources to deal with that final challenge. And if you just want to remove knob and tube wiring and update your electrical system, I also have a list of electricians I am happy to share with you.

If you might be planning to update your electrical system, either for insurance reasons, or to take advantage of greater safety and energy efficiency, I encourage you to check out these upcoming green home tours:

An Eco-Friendly Garden Tour

When: this Saturday, May 18^th, 10 – 4

A bit far afield, but if you are interested in a day trip, to Marin and Sonoma Counties, you can choose from among 26 gardens to tour.

The Eco-Friendly Garden Tour is a public outreach and education program that promotes sustainable landscaping practices by showcasing inspiring gardens throughout Sonoma and Marin counties. The Tour highlights Russian River-Friendly and Bay-Friendly landscaping best practices, and supports Qualified Water Efficient Landscaper certified professionals by featuring their personal or client’s gardens. Registration is required, however there is no charge to attend.

Green Home Tour

When: June 1, Saturday, 10 –  4

This year’s Green Home Tour will include a virtual tour of 3 homes in the morning and an in-person tour of 10+ homes in the afternoon. All of these properties have made substantial changes to become more energy-efficient, and in some cases are now net-zero energy. The tour is free, but pre-registration is required: https://ecologycenter.org/events/2024-east-bay-green-home-tour/

One of the homes that has achieved net zero energy is one where I helped produce a video tour last year, walking through the electric upgrades of his now amazingly efficient home. It was quite a transformation from its 1916 origins! I urge you to sign up so that you will receive the recordings, though it’s much more satisfying to  talk with homeowners who are happy to share the details of their improvements.

And a reminder about a concise and very helpful guide to electrifying single family homes, from a national expert, Sean Armstrong, who truly lives by his lessons.

Whether it’s to visit home or garden tours, or just enjoy seeing what’s growing in your neighborhood, I hope you’ll get out and truly smell the roses!

Arlene