With home insurance rates set to rise this summer, some area Realtors said Thursday they’re not sure how the increase will affect rebounding home sales in the region.

The N.C. Department of Insurance earlier this week announced a settlement agreement with homeowner insurance companies, allowing for an overall average statewide rate increase of 7 percent beginning on July 1.

But some homeowners in greater Wilmington, as well as much of southeastern North Carolina, will see their rates surge by nearly 20 percent – the biggest rate increase in the state.

That means a home valued at $150,000 in New Hanover, Brunswick and Pender county barrier islands would on average see their yearly insurance bill rise from $2,342 to $2,806 – a nearly $500 annual increase, or higher, depending on the size of home and insurance provider.  

R. J. Alex, president of the Wilmington Regional Association of Realtors, said Thursday his group lobbied hard against the increase. He said while the N.C. Rate Bureau did not get the full increase it asked for initially, the end results could prove difficult for existing and prospective homeowners and buyers.

“We are really concerned with south Brunswick County, Pender and southern New Hanover County beaches,” Alex said, noting that those housing markets were still slowly recovering from pre recession overbuilding. “While they [the Rate Bureau] didn’t get what they were originally asking for, it’s still going to be a big hit.”

Inland areas of the metro region are expected to see rates increase nearly 9 percent – pushing the insurance bill on a $150,000 house from $1,616 to $1,754.

Insurance companies, which are represented by the N.C. Rate Bureau, originally asked for an overall statewide average rate increase of 17.7 percent and a 30 percent increase for the entire Cape Fear region – including greater Wilmington. 

With the new insurance rate decision, Alex said it was frustrating that regions such as metro Charlotte, Fayetteville, Raleigh and Winston-Salem did not see their rates increase to the extent of homeowners along the coast.

Rates in Winston-Salem territory rates will increase by 1.1 percent, according to the agreement. The Durham-Raleigh territory will see its rates rise 2.8 percent.

“The western part of the state has just as many claims, if not more,” Alex said.

He said prospective homebuyers were monitoring the rate increase, adding that some area Realtors are losing sales because of the announced increase.

But while the increase could have an adverse affect on homeowners’ bottom lines, some Realtors say it may not be a factor in their business.

Justin Donaton, owner and broker with Carolina Beach-based Coastwalk Real Estate, said Thursday the costs could balance out given the low price for a home in the Pleasure Island area.

“We’re all disappointed to hear about the rate hike, but I don’t think it will have much of an affect,” Donaton said. “There’s balancing out of costs. When you add in the value of home in Carolina Beach and Kure Beach and you compare them with Bald Head Island … it’s pretty apparent.”

Donaton added that record low interest rates, reasonable pricing, shrinking lot inventories in New Hanover County and cash investors continue to drive sales in the region.

“There’s a very renewed since of excitement across the area, and it’s refreshing to see,” he said. “People are optimistic … I think we’ve hit the turning point.”

Michelle Clark, a Realtor and team leader with Wilmington-based Intracoastal Realty Corp., agreed, adding that some prospective buyers may not buy as much home as they originally planned.

“Yes, I think it’s something that buyers are going to consider,” Clark said of the rate increase. “I think it may cause buyers to adjust what they are looking for, and it’s something that they will take into consideration with their monthly costs.”

She doesn’t believe buyers will be deterred from purchasing homes on the area’s barrier islands.

“If they want to live by the ocean, they are going to do everything they want to do to live by the ocean,” Clark said. “It may mean a smaller home, and they may have to give up some things, but I think you’ll see the buyer factor that in before they move forward with the purchase of a home.”

And while North Carolina coastal residents are bracing for yet another round of increases, Clark said it could be worse.

“When you look at home insurance rates along the coast in Florida or California, North Carolina is still quite affordable,” she said. “It’s going to be an unpleasant increase, especially in a recovering economy, but I think the overall sense is that it could have been a lot worse.”