The hottest real estate market in December wasn’t San Francisco, or New York City, or Seattle. It wasn’t a fun ski town like Telluride, Colorado, or a warm retreat like Key West.
Instead, the market that saw the biggest surge in demand last month was Chico, California, a mid-sized city that until recently most people outside the Golden State had never heard of. And unfortunately, the reason Chico saw soaring demand was because thousands of homes in the area were incinerated by the worst wildfire in California’s recorded history.
Chico’s rise to become the so-called “hottest” real estate market in the U.S. last month is documented in a new report, released Thursday, from Realtor.com. The report shows that, in December, the median home price in Chico rose to $330,000, or 15 percent compared to one year prior. The number of views per property soared 76 percent year-over-year, and days on market fell from 68 in December 2017 to only 37 last month.
The only U.S. city with a greater increase in median price was Odessa, Texas, which was the third hottest market in the U.S. in December. However, homes in Odessa also sat on the market longer and saw less of a jump in number of views. In the San Francisco area, December’s sixth hottest market, prices actually decreased by 4 percent, according to the report.
Realtor.com’s economists attribute Chico’s price and demand growth to the the fact that the Camp Fire “destroyed large portions of the area’s housing inventory.” The result, in other words, was that the supply of housing plummeted even as demand — thanks to numerous displaced families — soared. It was a recipe for price increases.
“With the existing inventory forced to absorb the sudden demand, the market is very tight right now and it remains unclear if it will ease as things settle down in the coming months” Realtor.com stated in the report.
The Camp Fire began in November in California’s Butte County. It eventually destroyed 18,808 structures and killed 89 people, making it both the most destructive and deadliest wildland blaze in the state’s recorded history.
In an email to Inman, Realtor.com said that of the structures destroyed by the Camp Fire, 14,000 were homes in Butte County, where Chico is located. The damage was so severe and so sudden that even during the first days of December demand in the region was spiking.
A similar, but less extreme phenomenon played out around the same time in Southern California, where the Woolsey Fire destroyed 1,643 buildings in Ventura and Los Angeles counties.
The Woolsey Fire was the seventh most destructive blaze in California’s recorded history. In total, nine of the state’s 10 most destructive fires have taken place since 2003. Five of the most destructive burned just in 2017 and 2018.
The escalating destruction is a result of various factors including forest management and increased building in ecosystems that originally evolved to tolerate occasional fires. However, officials have also consistently said that climate change is one of the primary driving forces behind the mega-blazes. That means the fires and resulting turmoil in the real estate market may foreshadow things to come as climate change gets worse.
In the meantime, the Realtor.com report states that there is “evidence of deceleration as the national housing market begins to cool.” And the report offers a bit of a silver lining for Chico.
“For now,” the report state, “Chico remains affordable relative to the rest of the state.”