L.A. Home Prices Destroyed

There is limited evidence that home prices in areas partially destroyed by the L.A. wildfires have dropped by 50%. That is for houses still standing, some of which were damaged, and some in neighborhoods that were burned to the ground. Left out of the calculation is what homes built in the future will sell for. Probably not very much, compared to before the disaster.

Risky Areas

New homes face two challenges. One is that they remain in risky areas. Even plans to cut fire risk cannot eliminate it. Second, new homes may not be insurable. Insurance companies, in many cases, won’t take the risk. The purchase of new homes usually involves a mortgage. Mortgage lenders insist on home insurance. 

Markets where real estate prices drop often come back. That may not be true across most of America. Notably, the areas along the West Coast of Florida and western North Carolina may be uninsurable. Homeowners will need to gamble that they will not lose all of their money in a new catastrophe. 

Hail Storms And Flooding

Even homes in the center of the country are hard to insure, which will drive down prices. Tornadoes, hail, flooding, and thunderstorms have become more frequent and more violent. 

In America, homeowners have been comforted by the fact that home values grow higher over long periods, sometimes measured in decades. In parts of the country, that won’t be true anymore.

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