High-end home sales heat up – Median price up to $749,000 in March

SANTA CRUZ >> After months of lagging, the high end of the housing market has taken off in Santa Cruz County, with one in five homes in March sold for more than $1 million.

The median price — the midpoint of what sold — reached $749,000, the highest since August 2007, according to Gary Gangnes of Real Options Realty, who tracks the market.

Prices are just about where they were before the housing bubble burst.

Only twice in the past nine months did the median price top $700,000. Each time, homes selling for more than $1 million comprised at least 20 percent of the total sales.

BY the numbers

Close to the median

City of Santa Cruz

112 Lance Court, $735,000

305 King St., $749,000

710 Modesto Ave., $750,000

508 Western Drive, $755,000

109 Sunny Lane, $765,000

Santa Cruz County

9925 Love Creek Road, Ben Lomond, $730,000

219 Elva Drive, Rio del Mar, $745,000

2060 Day Valley Road, Aptos, $749,000

288 Crows Nest Drive, Boulder Creek, $759,000

205 Rancho Brazil Lane, Watsonville, $779,000

Lowest

575 Bridge St., Watsonville, $243,500

590 Argos Circle, Watsonville, $249,000

612 Ester Way, Watsonville, $264,500

614 Bridge St., Watsonville, $277,000

649 Bronte Ave., Watsonville, $289,000

Highest

3 Bird Hill, Santa Cruz, $1.85 million

375 Henry Cowell Drive, Santa Cruz, $1.9 million

400 Seaview Drive, Rio del Mar, $2 million

625 Beach Drive, Rio del Mar, $2.05 million

707 Seacliff Drive, Seacliff, $2.15 million

Source: Real Option Realty

Sales in March were up despite the higher prices, with 141 single family homes changing hands, up 24 percent from a year ago.

Just 403 homes were listed for sale as of the first week in April, which Gangnes said was down 21 percent from a year ago and the fewest for that time of year in at least 18 years.

Of the 283 active listings, 37 percent are priced at more than $1 million.

“My God, right now, the shortage of listings, things get bid up and up and up,” said veteran Santa Cruz appraiser Glenn Fuller. “On the Westside, everything as selling $20,000 over what it was listed… Like a lake, everything’s risen up.”

In Pleasure Point, a walkable beach community that Fuller said is “very hot,” sellers are asking $1,099,000 for a 700-square-foot bungalow at 215 30th Ave. Built in 1938, it’s been updated with solar panels. The backyard has room to entertain, a hot tub and shower, and there are plans for an addition.

“We are taking offers as they come and we currently have three interested groups,” said broker Dale Friday, five days after the house went on the market.

Sellers of a 1,100-square-foot bungalow circa 1949 on an acre at 3522 Mission Drive, near Dominican Hospital, are asking $1,349,000, pointing out the zoning creates potential for development.

“We’re seeing multiple offers for homes over a million,” said Suzy Rodoni-Silverberg of 831 Real Estate, attributing the demand to the strength of the job market in Silicon Valley.

A survey last year by Civinomics of Santa Cruz commuters to Silicon Valley jobs found the average salary was $153,000, three times the median income of $54,000 in Santa Cruz County.

Rodoni-Silverberg has listed a property on Endlich Drive, a gated community off Glen Canyon Road, for $1,175,000.

Kevin Johnson-Santa Cruz Sentinel

Seller Mary Jo Rose, who works in high tech and has a passion for design, bought the home and guesthouse in August for $900,000 and invested her own funds in a transformation that took four months. She gutted rooms, installed hickory wood floors, picked out new paint, chose a new look for the kitchen cabinets, replaced a purple bidet bathroom with mauve fixtures and a curvy white tub, and took out the “Brady Bunch” fireplace to put in a modern see-through fireplace.

“This is her hobby,” said Rodoni-Silverberg, who has worked with Rose before. “She has a great eye.”

She expects the multiple offer trend to continue as buyers who are outbid keep on searching.

The difference between today and the bubble days of 2007, is “These are real buyers,” she said. “Before they couldn’t afford the homes they were buying.”

She doesn’t see any signs of a slowdown in Silicon Valley’s job market.

The median price in Santa Clara County in March was $939,000, according to MLSListings.

Compared to Cupertino and Saratoga, home prices here are “reasonable,” Fuller said.

He said he’s heard of 800-square-foot rentals commanding $2,000 a month.

“With rentals going like they have, these properties are becoming little cash cows,” he said. “It’s whatever the market will bear.”

Comparable sales push prices up. As prices rise, the homes put up for sale are compared with homes that has risen in value and list prices rise.

The evaporation of distressed properties push prices up. Homes foreclosed by a bank sell for less but there were only four such sales in March, none involving condos. CoreLogic reports the foreclosure rate for the county was .29 percent in February versus 1.43 nationally.

Low interest rates push prices up. When the cost to borrow is less, people are willing to pay more. Experts have been predicting a rise in interest rates but it has yet to materialize.

“Who want to pull the punch bowl, so to speak?” asked Fuller.

Bidding Wars Loom On Low Inventory

Bay Area Home-Buying

The Bay Area’s housing market looks like it’s headed for a competitive free-for-all this year as a low supply of homes for sale has droves of buyers bidding up prices everywhere.

Sales of single-family homes in the East Bay, Peninsula and South Bay were the lowest for a February in seven years, according to a report Wednesday from real estate information service CoreLogic DataQuick.

The region’s housing market has been grappling with low inventory for years. Still to be seen is whether high prices will finally lure sellers off the fence, and, if not, whether prices will continue to rise. Other constraints on sales include tough loan requirements and affordability. For many buyers, the prices may have finally gone beyond their reach.

“March should provide a better view of emerging trends this year,” said Andrew LePage of CoreLogic DataQuick. “That said, it is easy to see that supply is still constrained.” Agents say they expect inventory to increase throughout the spring buying season.

February sales dropped by double digits from a year ago along the Peninsula and the South Bay and parts of the East Bay, CoreLogic DataQuick reported. Only Contra Costa County managed to hold the line with a relatively small 2.2 percent drop in sales.

The East Bay scored the biggest percentage price gains over February 2014, with Contra Costa County jumping 12.2 percent to $450,000 and Alameda County rising 9.6 percent to $548,000. Santa Clara County was up 8 percent to $782,000 and San Mateo County rose 4.7 percent to $921,500.

Real estate agents say it’s a classic seller’s market, except there aren’t many sellers.

That has buyers trying to outbid one another, sending prices skyward, said Ken DeLeon of Ken DeLeon Realty in Palo Alto.

“I don’t see any bubble at all,” DeLeon said. “I just see a lack of inventory.”

It’s pretty much the same in the East Bay. “We are experiencing a little bit of craziness right now,” said Tom Hendershot, a Redfin agent who covers the Oakland-Berkeley area. “We have less inventory on the market right now than we did at this time last year.”

Houses that have been on the market for two weeks or less are receiving an average of eight offers, he said. “It’s across the board, not just the most prestigious neighborhoods.”

Marisol and Rob Greenlee first bought a home in nearby Clayton and then put their Walnut Creek home up for sale, a nerve-racking but successful move.

“It was fast, it was thrilling, it was scary,” said Marisol Greenlee. “We had three offers.”

One was under the asking price of $1.075 million, one was for the asking price and one — the winning bid — was $75,000 over.

“The over-asking was coming from the Peninsula, where the market is so hot right now,” she said. “They came in aggressive and they got it.”

Craig Gorman of Intero Real Estate in San Jose and president of the Santa Clara County Association of Realtors, said a client recently put a 1,200-square-foot home in Santa Clara up for sale at $850,000 and sold it for $1.22 million. “It was a nice home but nothing off the charts,” Gorman said.

Home sales usually pick up in March.

“This is a very typical market,” said Margaret Garber-Teeter of Alain Pinel Realtors in Walnut Creek. “Right before spring there’s no inventory and a lot of pent-up demand.”

Garber-Teeter said buyers have to jump to get a house, but if they’re preapproved, make a good offer and move fast, they have a good chance of closing a deal.

Showing how prices have rebounded since the housing crash, she just listed a home in Alamo for $1.2 million that was once a short sale. That’s about what it commanded in 2007, she said. At the first open house last weekend, 65 potential buyers toured it.

Why the reluctance of owners to sell?

Chris Trapani, founder of Silicon Valley’s Sereno Group, said many homeowners with lots of equity from the past few years of rising prices are reluctant to sell and hand a big chunk of it over in capital gains taxes. Nor do they want to worry about finding a place to buy.

In the areas of Contra Costa County hardest hit by the housing crash, homeowners are just now seeing their equity recover, said Joy Di Ricco of Better Homes and Gardens Real Estate in Antioch.

“Now that they’ve recouped some equity in their home, they’re on the fence,” she said. “Do they purchase a new house, cash out, refinance?”

The answer for many is refinancing, taking some cash out to fix their place up with an eye toward selling it later on, she said.

By Pete Carey

pcarey@mercurynews.com

Contact Pete Carey at 408-920-5419. Follow him at Twitter.com/petecarey.

Median Home Prices and Sales in Santa Cruz County Continue to Rise

Median Home Prices and Sales in Santa Cruz County:

Median home prices and sales in Santa Cruz County are continuing to rise!

Median Home Prices and Sales for Santa Cruz County, California. Published 3/1/2015 in the San Jose Mercury News.

Every area of Santa Cruz County, with the exception of zip code 95064, rose in median home price and sales since December 2014.  6 out of 14 zip codes saw an increase in median home price and sales above 50%!

Median Price Change Index:

Median Price Change Index for Santa Cruz County, California published on 3/1/2015

Zip codes 95065, 95066, 95018, and 95073 had the highest median price change in Santa Cruz County.

95064 was the only area that did not experience a rise in median home price.

Overall, the median home prices in Santa Cruz County are going up, up, up!

See who sold what here.

Zillow takes over Trulia as the $2.5 billion acquisition is finalized

On February 18, 2015, Zillow acquired its competitor Trulia for $2.5 billion in a stock-for-stock transaction.

The 2.5 billion deal falls short of earlier value projections.  According to Frederic Lardinois, “When Zillow fist announced its intention to take over Trulia the stock price still valued the transaction at $3.5 billion. ”

When two very similar companies merge it is often the case that positions get cut and the workforce gets consolidated to avoid redundancies. Unfortunately, the acquisition of Trulia by Zillow was no exception. There were major layoffs as the companies merged, with 350 employees losing their jobs.

The combined Trulia and Zillow will now operate under the name “Zillow Group” (Z) and began trading on the NASDAQ today.

Zillow states that it “plans to offer a shared services and marketing platform for advertisers later this year,” according to Frederic Lardinois.

This could come as a relief to some real estate agents who use both websites. Offering a shared services and advertising platform will allow real estate agents to save time and money , which may come as a great relief to some agents who spend twice the time updating their listings and advertising on the separate websites.

While shared services will be offered later this year, for now Zillow and Trulia will continue to operate separately– as they did before.

Zillow has approached most of its acquisitions this way (HotPads, StreetEasy), allowing companies to operate independently while still merging into the overall Zillow organization.

Steve Symington warns that in yesterday’s conference call Zillow CEO Spencer Rascoff pointed out that “Zillow’s contract to receive some MLS data from Listhub…expires in early April.But Zillow is building out its own services to receive listings directly from the MLS.” Trulia has worked to acquire MLS data feeds and already receives around 125 direct feeds. Trulia’s advancement in getting MLS data feeds is another reason that Zillow will benefit greatly from its 2.5 billion acquisition of Trulia.

According to Rascoff the synergy potential of Zillow and Trulia is significant and “there will be significant cost savings as a result of that.”

As real-estate related advertising increasingly moves towards web and mobile base platforms, companies like The Zillow Group seem poised for a takeover.

What are your thoughts on Zillow and Trulia? What do you think of Zillow’s recent acquisition? Share your reaction in the comments below.

Zillow.com

Mortgage Rates Continue to Decline in January 2015

Mortgage rates are continuing to drop in 2015, falling for three consecutive weeks.

Freddie Mac reported that lenders were offering 3.63 percent on a 30-year fixed loan last week, down from 3.66 percent the previous week and 4.39 percent a year earlier.  15-year fixed loan plan rates have fallen to 2.93 percent, down from 2.98 percent the week before and 3.44 percent last year.

Mortgage rates are looking good as they continue to thin out in January 2015.

With mortgage rates declining for the third straight week this year, some borrowers are looking to lock in these historically low rates.

The Mortgage Bankers association said last week that applications to refinance climbed 22 percent last week from the week before.  Loan applications to purchase homes, however, dipped 3 percent last week.

It seems as if many home owners are eager to refinance and lock in low rates.

Andrew Khouri, from the Los Angeles Times, reported that “concerns over Asian and European economies have driven rates down to their lowest levels since May 2013.”

With mortgage rates  at historical lows, and continuing to decline, it may be a great time to think about refinancing your mortgage or purchasing a home.

Mike Castle-Real Estate Broker

CalBRE#00620895

(831)588-1988

http://www.mikecastle.com

mike.castle@mikecastle.com

Century 21 M&M and Associates

1500 41st Avenue, Suite 100, Capitola, CA, 95010

Happy New Year from Mike Castle at Century 21 M&M and Associates!

Happy 2015!

I had an excellent year with in 2014, and I am hoping that you did too!

I closed over 25 home sales and purchases, changed offices from American Dream Realty to Century 21 M&M and Associates, and received the coveted  Century 21 Centurion award.

I also closed several commercial property sales and purchases and expanded my marketing team. 2014 was certainly a busy year for me!

I am excited about working with Century 21 here in Capitola.  Century 21 M&M and Associates is in an aggressive growth stage.  We have just opened a new office in Watsonville and currently have offices in Capitola and Santa Cruz.

I am excited to usher in the new year and a strong housing market!

With so much to be thankful for in 2014, I am excited for and looking forward to a great year of sales and customer service in 2105!

Thank you to all of my clients and please keep in touch.  If you need help buying or selling a home or land I will work tirelessly on your behalf, while continuing to provide you with the highest level of customer service.

How do you feel about your success in 2015 so far?

What do you think the 2015 housing market has in store for us?

Let me know and keep in touch!

Wishing you a joyous and prosperous 2015!

Team Castle has Moved to Century 21 M & M and Associates

After a very successful 12 years with American Dream Realty, I have changed offices to Century 21 M & M and Associates is located at 1500 41st Avenue, Suite 100, Capitola, CA 95010. This new office is located just a few blocks up the street from the old office and on the other side of 41st Avenue. I did not like the direction American Dream Realty was headed in and a much better opportunity was presented to me.
I have worked very successfully in collaboration with Century 21 years ago. Since Century 21 M & M and Associates is a large company, it has countless advantages over smaller, family-run operations.

Century 21 M & M and Associates has a very successful track record and has many new offices opening in the Central Coast and Bay Area, including a brand new office in Santa Cruz, one in Capitola, and more on the way. I’m proud to say that Century 21 M & M and Associates are the number one Century 21 office in California and world-wide. My team and I look forward to developing this new alliance with this office and furthering our commitment to providing the best service possible to our clientele.

All’s well that appraises well

An appraisal is an important yet tricky-to-navigate part of the real estate process- ensure you’re getting a fair quote with these expert tips

An appraisal is an important part of any real estate transaction.  It helps the seller determine an asking price and helps the buyer’s lender determine a maximum loan amount.

Yet, given its important, how does a buyer or seller know they can trust that number?

Recently, mortgage giant Fannie Mae introduced a service called Appraiser Quality Monitoring, a list that serves as a guide to banks and lenders about doing business with a number of appraisers, based on appraisal data collected, monitored and evaluated.

While the list is available only to Fannie Mae-approved lenders, it already has put several appraisers on a so-called “blacklist” for inflating appraised value of homes, errors in reporting the characteristics of a home and not using comparable sales of similar homes.

“They very closely review the quality of underwriting and appraisal work, and if they see repetitious inaccuracies in appraisals or appraisal companies, they may end up on that list,” says Don Maxon, an independent certified financial adviser in San Rafael, Calif.

Here, real estate experts offer suggestions to help ensure you receive a fair appraisal:

Keep it local 

Lenders cannot choose a specific appraiser to assess a property.  But by speaking with your mortgage adviser about which company they work, you can help ensure that the appraisal company is local and experienced, says Sean Murphy, a mortgage consultant at RPM Mortgage in San Francisco.

Appraisers that have knowledge of the local market, its housing trends and the local community are vital, as these aspects can affect a home’s valuation.   “Particularly in an area where there might be more uniqueness to the properties, getting a local appraiser can be important,” Maxon says.

The appraiser will try to find comparable sales that are good fits for your property, says Mark Bird, an independent appraiser with Bird & Associates in Oak Hill, Va.  Features such as proximity to a city, size of the home and the property and waterfront or scenic views are all qualities that affect a home’s valuation.  If the appraisers are not local, you may want to consider another lender, Maxon adds.

Bring your real estate agent

Stricter regulations that prohibit undue influence on an appraiser’s valuation have been imposed since the global financial crisis.

“Appraisers have become much more resistant to any kind of influence of the valuations,” says Maxon.

However, the presence of a real estate agent can help facilitate the process by offering helpful information to the appraiser, says Murphy, who recommends presenting a list of any updates, changes or upgrades made to the property.

It’s important to remember that the general marketplace may not interpret the unique features of your home as valuably as you see them.

“Homeowners generally tend to think that their exclusive taste and their interior improvements have a lot of value,” Maxon says.

Further, when it comes to appraisals, you may get what you pay for.

“You can’t do a thorough job for a real discounted fee,” says Bird, who has worked in real estate industry for more than 25 years.

Large mortgage lenders may be willing to accept low bids from appraisers, which can mean using the services of appraisers who are less experienced or less thorough, says Bird.

To be sure, talk to your lender to find out what type of fees thee appraiser will be collecting for the service.

By- Alex Gallucci- CTW Features- Bay Area News Group- March 23, 2014

Gift ends long coastal battle

Environmental group donates 5,800-acre expanse to public, protecting it from development

Cementing protection for one of the largest privately owned pieces of land on California’s 1,100-mile coastline, a San Francisco environmental group on Monday donated to the public the Coast Dairies property- a pastoral expanse of rolling meadows, redwood forests and panoramic ocean views north of Santa Cruz.

“We are enormously pleased that generations from now it is going to look the way it does today,” said Will Rogers, president of the Trust for Public Land, which transferred the property to the U.S. Bureau of Land Management.

The 5,843-acre ranch 8 miles north of Santa Cruz was the subject of years of battles, even among environmental groups.

Marked with rows of artichokes and Brussels sprouts along its edges on Highway 1, the property was owned for more than a century by two Swiss families who acquired it in the 1860’s and joined holdings in 1902.  It had been coveted for development since the 1970’s, when PG&E acquired an option on it with plans to build a nuclear power plant near Davenport, and more recently, in the 1990’s when former Nevada developer Brian Sweeney attempted to carve it into 139 lots for luxury homes.

The property was preserved in its bucolic state in 1998, when the Save the Redwoods League acquired it for $44.5 million, most of which came from the David and Lucile Packard Foundation in Los Altos.

‘Spectacular area’

By the end of this year, two trails should be open to the public for hiking, said Rick Cooper, field manager with the BLM office in Hollister.  One, known as Liddell Creek Trail, is off Bonny Doon Road.  The other, the Molina Pasture Trail, is off Swanton Road.

“This property has redwood forests and creeks.  It’s a spectacular area for the public to get a true recreational experience, hiking up the terraces,” Cooper said.  “And looking back over the ocean, it’s a great view.”

Some environmentalists would like the property to become a national monument. For that, there is recent precedent.

Last month, President Barack Obama designated an area on the rugged Mendocino County coast, the 1,656- acre Point Arena-Stornetta parcel, as part of the California Coastal Monument, a preserve established by President Bill Clinton and overseen by the BLM.

Similarly in 2012, Obama designated 14,000 acres of Fort Ord, the former military base north of Monterey, as a national monument run by the BLM.  In both monuments, oil and gas drilling is banned.

Language in the deed transferred Monday bans any commercial logging on the property.  The Trust for Public Land also retained the mineral rights, blocking mining or fracking.

Cooper said that the BLM will develop, with public involvement, a long term plan over the next two years.  Uses probably will include hiking, horseback riding and mountain biking, he said.  Until the first two trails open, the lands remain closed to the public, he said, and BLM rangers will patrol it.

Like many major land-use issues around Monterey Bay, the preservation of Coast Dairies came with controversy.  After Save the Redwoods League acquired the property, it transferred control to the Trust for Public Land, a larger national organization.  The trust expected at first to donate the property to a public agency within two or three years after surveying its plants and animals and completing a use plan.

But when it opened up the planning process to community groups, the trust faced a barrage of competing interests from surfers to off-road motorcyclists to local residents concerned about everything from traffic to increased fire risk.

By 2004, the plan was finished.  The trust donated 407 oceanfront acres to the California state parks department in 2006.  But the land, a stunning mix of beaches and rugged cliffs, was all the state parks could take given tight budgets.

Battle for protections

The BLM, which agreed  to take most of the inland acres, didn’t want to manage the row crops and farmers along the coast.  So the trust planned to divide 740 acres and keep ownership, leasing it to farmers.  But then local environmental groups fought to require the trust to get coastal commission permission for that.  The groups wanted more protections locked into the deal, and the commission eventually granted a permit in 2012.

“Obama won’t be president forever.  The BLM changes based on administrations,” said Bill Parkin, a Santa Cruz attorney who represented several of the local groups.  “Making sure that the land has the appropriate protections on it was important.”

The local groups, the Rural Bonny Doon Association and former Santa Cruz Mayor Celia Scott among them, also sued, alleging that the trust violated state law regulating how properties are subdivided.  A county judge ruled against the groups in October.

“The community wanted to make sure there weren’t going to be dune buggies and logging and oil wells out there,” said Santa Cruz County Supervisor Neal Coonerty.

“Today is fantastic.  It’s been a long, long battle,” he added.  “The north coast was under threat for a long time, and through the efforts of a lot of people, it is going to be preserved and protected for our children and grand children.”

COAST DAIRIES LAND: PAST, PRESENT AND FUTURE

1860s: The property was owned for more than a century by two Swiss families who acquired it in the 1860’s and joined holdings in 1902.

1970s: It was marked for development and PG&E acquired an option on it with plans to build a nuclear power plant.

1990s: A developer sought to build 139 lots for luxury homes.

1998: The Save the Redwoods League acquired it for $44.5 million, then transferred control to the Trust for Public Land, a larger national organization.

Monday:  The trust transferred the property to the U.S. Bureau of Land Management.

What now? The land is closed to the public, but two trails should be open for hiking by the end of the year.

 

 

 

By:  Paul Rogers, Bay Area News Group, Tuesday, April 15, 2014

 

To Purchase or not to purchase earthquake insurance, that is the question

While friends and relatives post their images of frozen, snowbound misery from the Midwest and East Coast, the Bay Area continues to enjoy the advantages of a mild winter with the occasional, though not enough, rain shower.  The test of California’s weather courage has always been a running punch line.   It is hard to complain about February days in the 70s, only breaking out the sweaters and jackets in evening when the mercury dips into the high 40s and low 50s and it’s why people flock to the area in search of tract homes in the half-million dollar range and higher.

But California isn’t without its faults.  Literally.  While residents of the Golden State continue to pray for even more rain, it isn’t dangerous weather on the minds of homeowners and building managers.   It’s earthquakes.  Recent natural catastrophes in the east like hurricanes Sandy and Katrina, flooding in the Midwest and ice storms in the east remind of the need for vigilance as Mother Nature doles our her wares.  But one cannot prepare for earthquakes, though the California Earthquake Authority is trying.

Homeowners and building owners can purchase earthquake insurance.   But like all things in the insurance industry, the question isn’t one of the total protection, it’s about the cost benefit analysis.

“It would have to be an enormously destructive earthquake to be of benefit to the homeowner,” Insurance Agency LLC in Scotts Valley.  “We sell a lot of earthquake insurance here through our agency and every story is different.”  Cassidy said he does not carry earthquake insurance for his own property.

“When my wife and I decided to spend some money allaying our earthquake paranoia, we decided to spend some money having a contractor put in cripple walls and additional bolting of things,” he said.  Cripple walls are small wall structures built between the first floor and the foundation of a structure, allowing them to bear the seismic weight of the load of the structure.

“It really does depend on what the cost benefit analysis is,” said Cassidy.  “With a 10 or 15 percent deductible, which is what most policies offer, if you have a million dollar home,  then your deductible is $100,000.”  That’s a lot of money to lay out in the event of an earthquake powerful enough to do that much damage to your home.

“When you’re dealing with high rise rise condominiums, multi-level home or if you’re in an area where there is geographic liquefaction or serious catastrophic risk, then I would highly recommend earthquake insurance,” said Melinda Gedryn (cq) of Coldwell Banker San Jose. “Replacing your structure is not cheap with severe damage and so in that sense, it may well be worth having, again depending on your situation.”

But insurance and real estate professionals also think that after a natural disaster so destructive, the question arises as to what the Federal Emergency Management Agency would do.  After Katrina, for example, FEMA worked with homeowners to help them get back on their feet.  Would they do the same after a destructive earthquake?

And it’s not as if buying earthquake insurance is a simple matter of buying a policy.   The annual cost can be equal to or greater than what homeowners pay for their regular homeowners insurance, doubling their annual premiums.

“Private carriers and the Earthquake Authority run some pretty sophisticated mapping models based on address of a house.  They know what type of soil it’s sitting on, what the last earthquake did in damage and what the probabilities are,” said Cassidy.  “So the deductible will be the same, but the pricing will be based on the actual exposure.”  Thus, a house sitting along the Loma Prieta fault line is going to be more expensive to insure than a house located in a more stable area.

“Nuances affect the price,” Cassidy continued.  “What kind of construction is it?  Is it on a slab or not?  So, the quote that a company offers will have a 10, a 20 or a 25 percent deductible, or they may make the decision to offer only one deductible based on their risk analysis.”

But earthquakes aren’t really predictable in any way.  On the California Earthquake Authority’s webpage, the organization points out that the 1994 Northridge Earthquake in Southern California, which registered 6.8 on the Richter scale, occurred along a previously unknown fault line.  Even the science can only reach so far.  California is also home to two-thirds of the earthquakes in the U.S. registering more than 100 every day along more than 2,000 known fault lines.

“Each person is going to have different preferences,” said Demi Chizgi (cq) of Keller-Williams in Cupertino.  “We should all have earthquake kits and prepare for emergencies and be ready.  But reality sets in.  An earthquake feels so far away and if someone is in the middle of buying a house and doing all of those details, it just seems like something that’s not important.”  Chizgi said that every homeowner needs to do their own personal risk tolerance, just like they would when they’re investing money.

“Spending $1,000 a year on a policy you’re not sure you’re ever going to use is not something people warm too very well.  Fires, floods- they happen all the time and we see that,” said Chizgi.  “But earthquakes that do such extreme danger don’t feel like something real that they need to prepare for.”

Chizgi said the one thing that would make earthquake insurance a more appealing commodity is a lower price.  “If people hear they’re going to pay another $900 annually on a homeowner policy, they’re not as likely to buy it.   If it were offered for another $200 per year, it might be easier to make that purchase,” she said.

Cassidy said he can imagine being in a phase of life where spending $1,000 to $2,000 a year on earthquake insurance might be worth it.  “But personally, I can’t imagine it right now unless I had 100 percent equity and it was my primary asset.  Then I could see doing that.”