SEATTLE, Oct. 16, 2020 /PRNewswire/ -- (NASDAQ: RDFN) —
The median sale price of homes in zip codes with a low wildfire
risk has increased 101% since 2012, compared with an 88% increase
for homes in high-wildfire-risk zip codes, according to a new
report from Redfin (www.redfin.com), the technology-powered
real estate brokerage. 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.
Redfin's analysis is based on its own housing market data and U.S.
Forest Service data across 2,700 zip
codes in California, Oregon and Washington.
Over the 12 months ending August
2020, homes in high-wildfire-risk zip codes sold for an
average of 3.9% less than those in low-risk zip codes—$640,000
compared to $656,000. This is a
reversal from eight years earlier. In 2012, homes in high-risk
areas sold for an average 2.5% more than in low-risk
areas.
Home prices in high-risk areas first dipped below prices in
low-risk areas in 2015—three years before the Camp Fire became the
most destructive wildfire in California history, destroying over 18,000
structures and killing 85 people.
Double-digit price growth in already expensive West Coast cities
has likely driven homebuyers to look in more affordable, but
fire-prone areas. For example, Bay Area homebuyers who are priced
out of San Francisco, where the
median home sold for $1.45 million in
September, may feel forced into more high-risk areas such as
Santa Rosa, where the median price
in September was $690,000, or
Sacramento, where the median price
was $475,000.
"Buyers relocating to Sonoma
County from the Bay Area for affordability and quality of
life have made up more than 90% of my business since May, when more
tech workers started to get permission to work from home
permanently," said Sonoma County Redfin agent Sandrine Daligault.
"One buyer moved from San
Francisco to a neighborhood in coastal Sonoma, where he works remotely from a custom
home with water views he bought for $1.1
million, unheard of for a home of that caliber in the Bay
Area. Another client bought a home in Santa Rosa for $499,000 after selling his East Bay home for
$700,000. He's a police officer who
helped fight the Tubbs Fire in 2017, and he's not worried about
wildfires."
People based in San Francisco
make up a significant portion of Sonoma
County home searchers: 13.6% of Redfin.com users looking for
homes in Sonoma County were from
San Francisco in the second
quarter of 2020, about on par with 15% in the second quarter of
2019. The net increase in residents was the same during those two
time periods, with roughly 440 more Redfin.com home searchers
looking to move from San Francisco
to Sonoma County than vice versa
in the second quarters of both 2019 and 2020.
More than 4.5 million homes are located in areas across the
states of Washington, Oregon and California that have a high wildfire risk,
with a total estimated home value of $3.3
trillion.
Homebuying competition is more intense in areas with low
wildfire risk than in areas with high wildfire risk. To understand
how much more competitive the low-risk areas are, consider that 42%
of homes sold in low-risk areas over the past three years went
under contract within two weeks, while in high-risk areas, just 33%
of homes found buyers as quickly. Similarly, in low-risk areas, 35%
of homes sold above list price, compared to 27% in high-risk areas.
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.
Housing Market
Competition by Wildfire Risk
|
Measure
|
High Wildfire Risk
Zip Codes
|
Low Wildfire Risk
Zip Codes
|
Median
Price
|
$586,627
|
$609,944
|
Share of Homes Sold
Above List Price
|
27.2%
|
35.2%
|
Share of Homes Sold
in Two Weeks or Less
|
33.0%
|
41.8%
|
Sale-to-List Price
Ratio
|
98.6%
|
99.9%
|
September 2017
through August 2020 averages
|
"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."
If the trend of recent years continues and wildfires become even
more frequent and destructive, migration to high-risk areas could
slow. The gap between home prices and competition in high-risk and
low-risk areas would continue to widen, making it harder to sell
homes in areas with higher risk.
"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," explained Fairweather. "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. Wildfire
risk can dramatically increase insurance premiums, droughts can
increase water costs and heat can increase cooling costs or make
spending time outdoors unbearable. All of these factors can drive
homebuyers away from fire-prone areas. Rising home prices in
expensive cities also contribute to urban sprawl into high-risk
areas. But the long-term costs of building homes in fire-prone
areas can be both costly and deadly."
To read the full report, please visit:
https://www.redfin.com/news/home-prices-rise-slower-wildfire-risk
About Redfin
Redfin (www.redfin.com) is a
technology-powered residential real estate company, redefining real
estate in the consumer's favor in a commission-driven industry. We
do this by integrating every step of the home buying and selling
process and pairing our own agents with our own technology,
creating a service that is faster, better and costs less. We offer
brokerage, iBuying, mortgage, and title services, and we also run
the country's #1 real estate brokerage search site, offering a host
of online tools to consumers, including the Redfin Estimate. We
represent people buying and selling homes in over 90 markets in
the United States and Canada. Since our launch in 2006, we have
saved our customers over $800 million
and we've helped them buy or sell more than 235,000 homes worth
more than $115 billion.
For more information or to contact a local Redfin real estate
agent, visit www.redfin.com. To learn about housing market trends
and download data, visit the Redfin Data Center. To be added to
Redfin's press release distribution list, email press@redfin.com.
To view Redfin's press center, click here.
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SOURCE Redfin