Home sales in certain parts of California are beginning to fall as devastating wildfires become an annual reality in the state.

Home insurers have balked at the high cost of covering homes in wildfire-prone areas, according to the Wall Street Journal. After wildfires and brush fires ravaged parts of the state in 2017 and 2018, companies have paid out more than $24 billion to those whose homes were damaged in the fires.

Now, some insurers are declining to renew policies for tens of thousands of homes in those areas. Thousands more are expected to either increase their rates or decline coverage in coming years.

While the numbers for total damage costs in 2019 are still being calculated, analysts estimated reconstruction costs for the wildfires in September and October to be over $80 billion.

The parts of California most affected by autumn wildfires are usually rural. While many people priced out of cities like Los Angeles and San Diego have previously turned to these parts in their search of cheaper homes, the high price of fire coverage could make that impossible for many, Deputy Chief Economist of the California Association of Realtors Jordan Levine told the Journal.

“It really exacerbates an already challenging environment,”  Levine said. “Putting an even higher bar on the financial requirements of homeownership means that some folks are going to get priced out.”

Last year, CAR ran a survey asking members if insurance was a setback in the homebuying process and 34 percent of members responded that they’ve had buyers pull out of a deal due to not being able to find adequate fire insurance.

Rapidly-Spreading Wildfire In California's Butte County Prompts Evacuations

Thousands had to evacuate their California homes in September and October.

Lauralee Green, an agent and co-owner of Z Group Real Estate in Pollock Pines, California, told the Journal she now asks prospective buyers to submit an insurance quote before making an offer. She says her total annual home sales are down to $4.7 million from $8.8 million because many pull away from the deal after seeing the total.

“We’re just going to get a bunch of houses sitting on the market that won’t sell,” she said.

Currently, the state is trying to figure out how to best address the rising risk of wildfire damage — in December, it passed a ruling that protects more than a million houses across the state by banning insurance companies from declining insurance for one year after a wildfire.

But those who are looking to buy a home now may have a serious fire insurance-related challenge on their hands. Insurance companies are increasingly declining to cover certain areas for fire damage and, as a result, leaving homeowners to turn to the state insurer’s California FAIR Plan instead — a policy that can be more expensive, only protects up to $1.5 million in damages and doesn’t include liability and theft.

Michael Angles, a California resident looking to sell his mother’s home in Placerville, told the Journal that insurance costs have already gone up from $3,000 in 2018 to $3,800 in 2019 while the last renewal quote he received was $19,000. Angles, like many in the area, has decided to wait in hope of the situation improving to sell the house.

Email Veronika Bondarenko

Are you ready for what the industry holds in 2020? Inman Connect New York is your key to unlocking opportunity in a changing market. At Connect you will gain insight into the future, discover new strategies and network with real estate’s best and brightest to accelerate your business. Create your 2020 success story at Inman Connect New York, January 28-31, 2019.

Agenda | Speakers | Past Connect Videos

Thinking of bringing your team? There are special onsite perks and discounts when you buy tickets together. Contact us to find out more.

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription