Wildfire Risk Hurting CA Home Values, Increasing Insurance Costs

By Desert Star Staff

In terms of home value and insurance costs, it is getting increasingly expensive to have a home on the edge of the woods in California.

A new study from the nonprofit think tank Resources for the Future found home values in a fire hazard severity zone drop 4.3%, an average of $21,500, when sellers make the required disclosure.

Margaret Walls, director of the climate risks and resilience program for Resources for the Future and the report’s coauthor, said the market is driving the price drop.

“We want to know that people understand the risks when they choose where to buy a house,” Walls explained. “And if they know the risks, we expect them to be reflected in the prices.”

Walls pointed out that local governments can limit building in the urban/ wildland interface to mitigate the risk of a destructive wildfire. The state and federal governments can reduce the fuel load on public lands. Homeowners can remove brush and other flammable materials, ensure fire-resistant building materials, and build in defensible spaces.

Two large insurance companies, State Farm and Allstate, announced they no longer write new homeowner’s policies in California, mainly due to the risk of wildfire. Walls noted that the effects of climate change are taking a financial toll.

“If you’re in a high-firerisk area, it’s already hard to get insurance,” Walls stressed. “So now two more companies are unavailable to you. So you’ll probably go to the FAIR plan, considering the insurance of last resort.”

The FAIR plan is a state-run risk pool offering fire insurance in highrisk areas not served by traditional insurers.

Disclosure: Resources for the Future contributes to our fund for reporting on Climate Change/Air Quality, Energy Policy, Environment, and Urban Planning/Transportation.