Wildfires threaten 2.6 million homes in the western US: CoreLogic
Climate change has fueled wildfires in at-risk areas across the country, and the impact on housing could be catastrophic.
A new report from KernLogic found that 2.6 million homes in 14 Western states are at risk from wildfires. California is by far the state with the most homes at risk at 1,258,748, followed by Colorado (321,294) and Texas (244,617).
In 2022, Zillow estimated that the US had a housing shortage of 4.5 million. For a country already facing an acute housing shortage, homes lost to bushfires will undoubtedly hold back efforts to close the gap.
“In recent years we have seen wildfires in unexpected places, reinforcing the need to understand the risk landscape and take mitigation actions,” Jon Schneyer, director of catastrophe response at CoreLogic, said in a statement. “Both insurers and consumers have a role to play to ensure adequate protection. These numbers may seem overwhelming, but research shows that mitigation efforts make a real difference in the potential losses from wildfires. The good news is that people can take actions to reduce the risk.”
Breaking down the numbers at the metropolitan level underscores how devastating California’s wildfires have become. Of the fifteen American cities with the highest risk level, ten are in California.
The Southern Californian cities of Los Angeles, Riverside, San Diego and Santa Barbara together account for 595,129 at-risk homes. The Bay Area cities of Sacramento, San Francisco and Santa Rosa together account for 223,374 homes. Together, these two areas represent 31.4% of the total number of homes at risk of wildfire damage.
Rising insurance costs have put pressure on homeowners in areas exposed to climate change risks, including bushfires. But CoreLogic said regulatory changes could help better cover homeowners in these areas.
The report uses California as an example and highlights a new policy adopted by the US in June California Department of Insurance. It allows insurers to use catastrophe models when setting rates as they increase policies in high-risk areas.
Competition between insurers is still higher in areas with a low risk of wildfire and lower in areas with a high risk. But CoreLogic’s probability model indicates that a wildfire causing $15 billion in insurance losses – like the devastating 2018 wildfire that destroyed 90% of the town of Paradise, California – has only a 2% chance of occurring in any given year doing.
CoreLogic recommends that homeowners take mitigation measures to reduce the risk of their properties being destroyed by wildfires. These include creating a buffer between the house and vegetation, using quality roofing and metal gutters, and keeping tree debris, firewood and propane tanks at least 30 feet away from the house.
The report states that if homeowners in Paradise had taken these measures before the fire, overall losses could have been reduced by 53%. Similar measures at community level would have reduced expected losses by 15%. Safety measures taken at both the homeowner and community levels would together reduce the expected loss per home by 75%.
