California House Prices Plunge Up to $400k as Insurance Crisis Deepens

A luxurious three-bedroom single-family home in Wine Country, California, listed for sale on Zillow in late May has dropped in price by over $400,000 after spending over a month on the market without going under contract.

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The massive reduction comes as Crestbrook Insurance Co. officially stopped renewing policies, a move that's likely to deepen the state's insurance crisis.

The property, located at 17371 High Road in Sonoma, California, was re-listed on May 21 for $3,098,000 after a previous listing made in early September 2023 was removed on January 1. In September 2023, the asking price for the property was $3,098,000; between then and January 1, the listing saw two separate price cuts that brought the asking price for the stunning home down to $2,798,000.

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Now the property is going for $2,695,000—the lowest asking price it has had on Zillow in the past three years. The public record of the property shows it was sold for only $40,000 in 1994, but between 2021 and late 2023, the asking price remained steadily above the $3 million mark.

The house, which has four bathrooms, a swimming pool and a private patio, was built in 1973 but appears in very good condition in pictures on Zillow which shows a very modern interior. According to the listing description, the 1-acre property offers privacy while "creating the feeling of a personal park in your own backyard."

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But despite the amenities, it looks like the agent selling the property knows there aren't so many eager buyers in the market at the moment—especially as mortgage rates remain high and insurance premiums skyrocket in California.

Vacation rental investor Rohin Dhar, who first spotted the listing and shared it on X, commented on the price reduction saying: "I think [it's] fair to say lack of availability of homeowners insurance and wildfire risk in California is having an impact now."

Crestbrook, a subsidiary of Nationwide, announced earlier this year that it would stop renewing home insurance policies in California and pull back from the state by June 15. In February, the San Francisco Chronicle wrote that the insurer, which catered to wealthy clients, had a total of 20,275 policies in the Golden State worth more than $38.4 million in premiums.

Last week, the first letters notifying Crestbrook's clients that their policies will not be renewed because "the company has made the business decision to exit the homeowners product line in the State of California" started circulating on social media.

As other companies have withdrawn from California in recent months, the state's homeowners are increasingly out of options for coverage. Many have had to turn to California's insurer of last resort, the FAIR Plan, which has generally higher premiums and does not include coverage for theft, liability and water damage.

But as wildfire season kicks in, fire damage is what most California homeowners will be concerned about. And it's the heightened risk of more frequent and more severe wildfire, exacerbated by climate change, that is pushing up premiums.

Are you a California homeowner who is struggling with finding coverage with a private insurer? Contact g.carbonaro@newsweek.com