How Will the Southern California Wildfires Affect Local Real Estate?
Just two months after the deadliest wildfires in California’s history, hundreds of miles to the north in the wine country of Sonoma and Napa counties, the state finds itself fighting a growing and dangerous conflagration again.
As of Friday morning, six wildfires in Southern California had torched 141,000 acres, 212,000 people had been evacuated, and hundreds of buildings had been damaged and destroyed, according to the most recent information from the California Department of Forestry and Fire Protection, or Cal Fire. Several people have been injured, but no casualties have been reported so far. The state has issued its highest fire alert.
More than 86,000 homes in Ventura and Los Angeles counties are at risk of damage from this latest round of fires, according to real estate data firm CoreLogic. That could cost $27.7 billion to rebuild. And these figures don’t include the more recent blazes that broke out in San Diego to the south and Riverside County, east of L.A.
Compounding the tragedy is that these are already tight housing markets. That could get worse as more displaced renters and homeowners compete for whatever unharmed abodes are available as they rebuild.
It could “exacerbate an already challenging market for buyers,” says Chief Economist Danielle Hale of realtor.com®. “People will probably look more toward apartments.” But there aren’t enough affordably priced rentals to go around either.
In all of California, nearly 2,045,000 homes are deemed at high or extreme risk from wildfires, according to the 2017 Verisk Wildfire Risk Analysis. That’s 15% of the state’s households, according to the insurance, natural resources, and financial services data analytics company based in Jersey City, NJ.
Lessons learned from October’s deadly fires
Usually after a major disaster, real estate prices drop. Buyers don’t want to look out their windows to see the burnt-out remains of their neighbors’ homes. Whole neighborhoods can become loud and messy construction zones as residents rebuild their beloved communities. And of course, there are always fears that another disaster could strike.
The October fires in Northern California killed 44 people, damaged more than 21,000 homes and 2,800 businesses, and cost more than $9.4 billion in insurance claims as of Dec. 1, according to the California Department of Insurance. About 100,000 residents were forced to flee their homes.
But instead of prices going down, they actually shot up in Sonoma and Napa counties after the tragic wildfires.
Median prices of single-family houses rose 6.1% in Sonoma and 7.5% in Napa from September to November, according to real estate brokerages.
