A report by Fox News found wildfires are impacting California’s real estate market as insurers look to back out of fire-prone areas and potential buyers face high costs for plans.
The Wall Street Journal reported insurance companies have reduced their wildfire exposure in the past two years after paying more than $24 billion for the state’s wildfire losses in 2017 and 2018.
Lauralee Green, co-owner of Z Group Real Estate in Pollock Pines, California, told The Wall Street Journal that she now requires prospective buyers to submit an insurance quote before making an offer.
“I’ve had so many deals fall through,” she said, adding she sold about $4.7 million in real estate last year, down from $8.8 million in 2018.
Also, home insurers have declined to renew policies for thousands of homeowners across the state and regulators expect more nonrenewals in the coming months.
California was home to 16 wildfires last October. Fox News reported last month that state officials added protection for homeowners, preventing insurance companies from dropping them as customers for a year after a disaster-level wildfire burns near their homes.
State officials added the rule after the found insurers had dropped fire coverage for more than 350,000 residents following wildfires in 2018.
The new protection applies to more than 1 million California homeowners, however, it doesn’t cover homebuyers or owners in areas that didn’t have a wildfire last year.
Wildfires in 2008 caused $719 million in damage. That number rose to $1.1 billion in 2015 and the combined damage for fires in 2017 and 2018 was $25.3 billion, according to the California Department of Insurance.
CoreLogic reported last year that nearly 9 million acres burned in 2018, with more than 1.8 million being in California.
California’s Camp Fire was one of the most destructive in the state’s history, with a total loss of $9.3 billion. In a review of 2018’s fires, CoreLogic examined how California’s most extreme wildfires impacted single-family housing in the state.
Tom Jeffery, Principal, Science and Analytics at CoreLogic, noted how recent wildfires stack up against the past.
According to Jeffery, there is a concerning trend towards larger and more destructive fires, as well as a rising cost of managing these fires.
“The Federal cost of wildfire suppression has gone from $1 billion in 2000 to $2 billion in 2015, and now $3 billion as of 2018 last year,” he said.