Wildfires continue to rip through the west coast, but that doesn’t mean homebuyers won’t purchase in high-risk areas. More than 4.5 million homes are located in areas at high risk of wildfire across the states of Washington, Oregon and California, with a total estimated home value of $3.3 trillion, a new Redfin report said.
Since 2012, the median sale price of homes in ZIP codes with a low wildfire risk has increased 101% compared to an 88% increase for homes in high-risk ZIP codes, per a Redfin analysis of the housing market and U.S. Forest Service. Data was gathered from 2,700 zip codes in California, Oregon and Washington.
In the 12 months ending August 2020, homes in high-risk ZIP codes sold for an average of 3.9% less than those in low-risk zip codes – $640,000 compared to $656,000. According to Redfin, this is in part due to more intense competition in areas with low wildfire risk.
“This disparity exacerbates the affordability crisis in low-risk areas, forcing homebuyers who don’t have large budgets to look to more fire-prone regions for affordable homes,” the report said.
In low-risk areas, 35% of homes sold above list price, compared to 27% in high-risk areas. The competition is so fierce that 42% of homes sold in low-risk areas over the past three years went under contract within two weeks. In high-risk areas, only 33% of homes were purchased in the same timeframe.
“The lower cost of housing in wildfire-prone areas compared to low-risk areas is likely just the beginning of the consequences of climate change for the housing market,” said Redfin chief economist Daryl Fairweather. “Right now, wildfires are still a rare occurrence for homeowners, but if fires and other climate disasters continue to happen more and more frequently, some housing markets will go from less desirable to untenable, yet they will remain the only option for many families.”
Redfin said that for Bay Area homebuyers who are priced out of San Francisco, where the median home sold for $1.45 million in September, they may feel forced into more high-risk areas such as Santa Rosa, California, where the median price in September was $690,000, or Sacramento, California where the median price was $475,000.
“The tougher competition in low-risk areas makes it harder to buy a home where it’s safer, and gives buyers another reason to shift their home search to risky areas where homes are more affordable and there’s less competition,” the report said.
“Right now people are still migrating to places that have suffered through wildfires or smoke in the central valley and wine country in California and parts of Oregon because homes in those places seem like a good deal,” Fairweather said. “Homebuyers often look at the lower sticker price on homes with more fire risk and are driven to buy because it’s what they can afford.”