The U.S. housing market has endured many dark days in the past few years. The first quarter of 2011 saw a precipitous decline in home values. Since then, the number of homeowners reportedly “under water”—owing more on a mortgage than the dwelling is worth—has continued to climb.
Exacerbating real estate woes are rampant foreclosures, high unemployment rates, and mounting consumer debt, making the likelihood of home values stabilizing by the end of this year unlikely.
To address this reality, Home Value Insurance Co. is offering a new type of homeowners’ coverage, one intended to safeguard families against a decline in property value. The San Francisco, Calif.-based business announced this week that Ohioans will be the first parties eligible for such a policy. For several years, various financial companies have provided similar coverage for which a homeowner would pay a one-time fee.
Home Value’s pricing model differs in that homeowners pay a monthly premium, which is based on the home’s value and its current location. In the event the policyholder sells the home for less than he or she initially paid, a claim could be filed to recoup a portion of the loss.
“A typical Ohio homeowner would pay $35 to $45 a month,” the company reported to The Columbus Dispatch. “A person’s home value will be determined by how it tracked over time against the Case-Shiller index or by the sale price, whichever yields the least for the homeowner.”
Though clearly not for everyone, the policy is most attractive to residents who do not anticipate staying in their homes for too long and are concerned about depreciation. Currently the coverage is only available in Ohio; however, the company says it expects to sell the policies in 15 to 20 states by the end of 2012.