How will State Farms pullout affect home prices in California?

The news that Allstate & State Farm are no longer writing new homeowner policies in California is clearly not a positive sign but the impact on home prices is not clear. In the fire prone areas – notably the Santa Cruz mountains and the Santa Rosa area – inventory remains low while demand is still very high.

With State Farm no longer in the picture, Farmers Insurance is the only top-name insurance company offering policies for mountain homes – and they often require buyers to purchase the state-offered FAIR Plan for fire insurance, which can be up to four times more expensive than conventional fire insurance.

Some analysts believe that withthe median price of a home in the Santa Cruz mountains around $1.4 million, the additional cost of fire insurance is not going to be a significant factor.

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