California Wildfires Put $2 Trillion in Housing at Risk
The winds have died down, somewhat, in California, and the past week’s wildfires are ebbing. But two reports suggest after the totals are tallied up, as much as $2 trillion in housing in four heavily populated counties are at serious risk.
Redfin, Seattle, said four California counties top the list of places at risk of losing the most housing value due to destruction from wildfires. Los Angeles County, home to more than $1.2 trillion worth of homes and one of the region’s most susceptible to wildfires in the U.S., stands to lose the most housing value. Next come Orange County ($502.6 billion in total housing value), Santa Clara County ($488.5 billion) and San Diego County ($417.6 billion).
Lindsay Katz, a Redfin agent in Los Angeles, said this year’s wildfires represent a “turning point” for thousands of Angelenos. “People who live in Southern California and people buying homes here are getting fed up because not only are the wildfires bad right now, but they’ve been relentless over the last few years, she said. “In the past, residents would get a few years off between fires and they would kind of forget about them–but we haven’t even recovered from the Woolsey Fire that hit Malibu last November and people are evacuating and losing their homes again.”
The report said some desirable and expensive areas in the country are at high risk for destruction from wildfires. Seven of the 10 counties at risk of losing the most housing value on account of potential wildfires are in California, and many of them are in expensive areas. Two of the remaining three are in Texas, and the other one is Clark County, Nevada, home to Las Vegas.
“It’s no surprise that California tops the list of the most homes at high-to-extreme wildfire risk, given the state’s size and population density, as well as the popularity of residential expansion into the wildland urban interface,” said Tom Jeffery, senior hazard scientist with CoreLogic, Irvine, Calif. “The high density of homes located in wildfire-susceptible areas only increases the threat of future catastrophic events and the possibility of billion-dollar losses.”
Redfin agents in Sacramento and El Dorado counties in Northern California are also reporting a major shift in housing markets located in fire-prone areas, particularly those where premiums for fire insurance are rising and where PG&E is cutting power for days on end in an effort to prevent wildfires, something that could continue for decades.
Debbie Olson, a Redfin agent in Sacramento, said homebuyers and sellers in the area are concerned about the impact of wildfires on home prices and total housing costs. She said one buyer was quoted a price of $9,000 per just for fire insurance. “Even though the seller offered to pay half the cost for the first two years, my clients ultimately decided to buy a home in a neighborhood that’s less fire-prone to avoid paying such a high premium,” she said.
Redfin said the seven counties at risk of losing the most housing value due to wildfires are also places where housing supply is declining annually. For instance, supply was down nearly 12 percent year over year in Los Angeles County in September, and it declined more than 17 percent in Orange County. Wildfires in those areas could exacerbate the housing shortage, partly because many homeowners are choosing not to rebuild after their homes are destroyed.
Redfin said the average acreage burned by wildfires annually in the U.S. has nearly doubled since the beginning of the century, from 4 million between 1990 and 2000 to 7 million between 2008 and 2018. CoreLogic said 2018 was another record-breaking year for the country, with 8.767 million acres burned–a size roughly equivalent to 74 of the 75 largest cities in the United States combined and the sixth-highest total since modern historical records began in the mid-1900s. California, Nevada and Oregon topped the list for most acreage burned in 2018, with a combined total of 3.72 million acres burned in the three states. In California, 2017 and 2018 caused more wildfire-related property damage than the state has experienced in any two consecutive years of its history.
The Redfin report can be accessed at https://www.redfin.com/blog/california-wildfire-hazard-risk-housing.