Growing Wildfire Risk Challenges Homeowners Across the US

The growing threat of wildfires is challenging homeowners across the U.S. Not only are major insurers pulling out of high-risk markets, but homeowners also struggle with finding skilled contractors and high costs when it comes to rebuilding after a wildfire. 

In its 2025 Wildfire Risk Report, property data provider Cotality analyzes housing markets across the U.S. to determine wildfire risk and the impact on homeowners. According to the report, there are nearly 2.6 million homes at moderate or greater risk of wildfire with a combined reconstruction cost value of $1.3 trillion in the U.S. 

Wildfire risk is rising across the U.S., but some states face much higher risks than others.

Wildfire risk is growing in many areas of the U.S., especially across the West. California is considered the most at-risk state. In California, more than 1.25 million homes are at risk of potential wildfire damage and the reconstruction cost value has risen to $796.1 billion.

Colorado follows behind in the number of at-risk homes—though the threat is much lower than in California. In Colorado, there are 318,783 homes at risk, with a reconstruction cost value of 146.2 billion. Colorado is followed by Texas and then Oregon, with each state reporting 243,136 and 128,007 homes at risk, respectively. In Texas, the reconstruction cost value is $95.4 billion, while in Oregon, it is $47.5 billion.

Despite major destruction, Los Angeles experiences slow recovery effort following January wildfires

With damage to over 13,500 properties—resulting in $40 billion worth of insured losses—the wildfires that broke out in Los Angeles in January 2025 are a clear example of the risk homeowners in wildfire-prone areas are facing. As of May, only 50 building permits have been issued to rebuild in Los Angeles, and just 15 permits had been issued for rebuilding in nearby Altadena.

A lack of insurance coverage is partially to blame for the slow rebuilding time, with the report finding that typical insurance payouts in these Los Angeles neighborhoods do not cover rebuild estimates. High construction costs add to this challenge, with construction loan interest rates currently hovering between 10% and 12%.

High insurance costs exacerbate these issues

• Home Insurance Costs Soar by 40% in 6 Years: Insurance costs are soaring across the U.S. In some states, insurance costs have grown by more than 70%. 
• Homeowners Insurance: The Other Affordability Crisis: Home prices aren't the only cost keeping homebuyers at bay. Rising homeowners insurance premiums add another barrier to homeownership.