[dv_dt]

It might reduce property prices, but affordability would be adversely affected. The change would require the same cash flow from buyers. Instead of the costs being on a basis of mostly on high-stability mortgage loan rates, some of the required cash flow moves to a basis of insurance rates which are annually bumped (as proposed, now with less or no regulation).

[bradchris]

Affordability would be adversely affected in the short term, yes. In the long term, more housing production would be incentivized in less-risky areas. The reduced property prices to come out of this would also mean insurance rates would decrease for them proportionally— insuring for $600k is cheaper than insuring $6m, all else being equal.

On the other hand, affordability will also be adversely affected in the short and long term if nothing changes. Once the moratorium for insurance companies to leave the state is up in about 1 year, and no one can get a mortgage because no insurance providers are left. Banks will not take on the implicit roles of insurers in a no-recourse loan state.

Doing nothing is not an option. The writing is on the wall.

[dv_dt]

There are no less risky areas left to build into in the Los Angeles area. To build more you have to fight nimbys to change neighborhoods from mostly single family residences and build for density increases.

I agree that doing nothing is an increasingly unviable option

[bradchris]

Yes. I live in Los Angeles. Huge swaths of our entire city are ripe for development— the safest areas are often some of the least densely populated, and that needs to change.