Due to the recent destructive blazes, the risk of homeownership in fire-prone areas in California is outweighing the reward for many potential buyers. With wildfire insurance costs sky high, they are looking elsewhere to avoid being forced into a pricey insurance plan. Real estate agents are having a harder time selling houses, and if potential buyers do put in a bid, it is a lower offer than they would normally put forward. Although the most at-risk areas are rural, this fear of fire could affect the whole state by tightening the already challenging market.
Home sales are slowing in wildfire-prone areas of California as insurers retreat from high-risk regions, say real-estate agents and homeowners.
Insurance companies have continued to reduce their wildfire exposure in the past two years after paying more than $24 billion for California wildfire losses in 2017 and 2018. Home insurers have declined to renew policies for tens of thousands of homeowners across the state, and regulators expect more nonrenewals in the coming months.
Real-estate agents say potential buyers are having difficulty obtaining insurance and are backing out of purchases or lowering their offers after realizing how much insurance would cost, which can be thousands of dollars a year or more in wildfire-prone areas.
Lauralee Green, co-owner of Z Group Real Estate in Pollock Pines, Calif., now requires prospective buyers to submit an insurance quote before making an offer.
“I’ve had so many deals fall through,” she said. Ms. Green said she sold about $4.7 million in real estate last year, down from $8.8 million in 2018.