Redfin report says this year could see more homeowners quit the state
The devastating impact of the California wildfires could prove too much for many residents.
Redfin says that this year’s fires could see four counties losing the most in housing value, led by more than $1.2 trillion in LA County, followed by Orange County ($502.6 billion in total housing value), Santa Clara County ($488.5 billion) and San Diego County ($417.6 billion).
And the cost and risk of the wildfires could be a “turning point” for the state’s housing market which are having a greater impact this year than in the past according to real estate agent Lindsay Katz.
"People who live in Southern California and people buying homes here are getting fed up because not only are the wildfires particularly bad right now, but they've been relentless over the last few years,” Katz 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."
Among the markets at the highest risk from wildfires are some of the most expensive in the US.
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.
The seven in the Golden State are also areas where inventory is declining annually, partly due to homeowners being reluctant to rebuild after their homes were destroyed. In LA County inventory was down 12% year-over-year in September 2019, while Orange County’s supply dropped 17%.
Homeowners are concerned
With the risk of wildfires pushing up insurance costs and electricity outages being implemented to reduce the risk; homeowners are becoming increasingly concerned about home prices and total housing costs.
"Homes in places like Malibu, the hills around Los Angeles and wine country in Northern California have historically been desirable because the natural beauty of the surroundings has outweighed the risk of natural disaster," said Redfin chief economist Daryl Fairweather. "But with homebuyers and sellers in fire-prone parts of California really starting to feel how environmental risk factors are impacting both the safety and value of their homes, long-term demand will change, though California overall is unlikely to lose its luster.”
Fairweather added that demand and prices for homes in fire-prone areas will go down, but as a result they'll increase in safer parts of the state.
“California is in the midst of a housing shortage, and the state should take wildfire risk into account when deciding where to focus its building efforts," he said.
