There’s an incredibly risky two-pronged trend in the housing market. Insurance companies are refusing to cover properties because they’re located in severe weather zones or because the housing stock is old. And banks won’t give you a mortgage because of the same risk. The outcome is a further divided housing market—traditional homes that can be insured and mortgaged and a burgeoning segment of properties that can only be sold for cash and at a deep discount, if at all.
An estimated $1.6 trillion in property value of uninsured homes was at risk three years ago and 6.1 million homeowners were uninsured, concluded a report published this year from the Consumer Federation of America. It’s only grown worse since then, even if that is the most recent data available. And yet, such homes can still sell. According to Axios, “uninsurable homes still change hands on the housing market.” You can’t take a mortgage out on them, but you can pay all-cash, and probably receive a steep discount, the publication reported.
