Housing affordability is getting squeezed by a new pressure — the cost of insurance.
At a recent residential real estate roundtable held by Pacific Business News, industry leaders expressed concerns that soaring insurance costs are pushing home ownership further out of reach for many.
The condo market is getting hit especially hard.
Kalama Kim is the president of Berkshire Hathaway HomeServices Hawaiʻi Realty and is the immediate past president of Hawaiʻi Realtors. As he explained, getting full replacement cost coverage on hurricane insurance has become “a crisis.”
Faced with higher premiums, some condo associations elect to have bigger deductibles on their master policies.
For current owners, this means they have to increase their own coverage to make up the difference.
People who want to buy into such buildings may find it difficult to get a mortgage, as lenders are wary of properties that aren’t fully insured.
And it’s raising the cost of condo ownership, either through higher premiums for their own homeowner’s insurance or higher maintenance fees to help pay for the building’s master insurance policy, or both.
Trevor Benn, president-elect of the Honolulu Board of Realtors, said he has seen maintenance fees climb by as much as $300 or $400 a month due to insurance costs.
This isn’t increasing purchase prices, but it is raising the total cost of condo ownership, which typically had been the relatively affordable alternative to a single-family home.
