January Update Will the LA fires break the home insurance market?
The Los Angeles fires are on pace to be one of the most expensive natural disasters in US history at more than $250 billion. These tragic fires have put a spotlight back on California’s homeowner insurance problems.
Why it matters to you: You and other homeowners could ultimately pay for part of the insurance payouts from these fires through higher rates. And insurers could pull out of California or stop insuring fire-prone areas.
This could have cascading effects on the housing market.
If insurance becomes unaffordable, it will price many people out of their homes and force them to sell. The would likely lead to lower home prices.
What’s next: Insurance will get more expensive in the short term and more challenging to get, so keep that in mind if you’re considering switching insurers. Expect to hear a lot more about home insurance this year and potential solutions.
For cost of homeownership, interest rates will also define 2025.
Mortgages were supposed to get cheaper after the Federal Reserve cut interest rates last year.
However, mortgage rates are above 7% again—the highest rate since July 2024. That’s creating affordability challenges for some buyers as we kick off the year.
Why? Ongoing concerns about inflation are keeping rates high.
While interest rates will play a significant role, the LA fires could also drive up prices as displaced residents move to different parts of the state. Fresno did see a lot of growth from out-of-town residents during the pandemic.
Fresno County Market Update
The Fresno housing market experienced a slight dip in median home prices from the last month to $440,000 -- but this is 6% higher than one year ago.
Sales still trending up: Home sales increased by 17% versus last year, showing that there is more activity than last year.