California Wildfires Force Thousands to Find Housing in Already Tight, Pricey Region
- In 8 of 11 ZIP codes most impacted by the California wildfires, the median home value is at least double the U.S. figure.
- In many areas, inventory prior to the fires was already down by more than 10 percent year-over-year in August – and in some places more than 20 percent. That’s before fires burned down thousands of homes in the area, reducing would-be inventory in an already slim market.
The California wildfires raging throughout Napa Valley wine country have inflicted millions of dollars of property damage in some of the nation’s priciest communities and forced thousands of displaced families to seek new living arrangements in already limited local real estate markets.
As of August, the median U.S. home was worth slightly more than $200,000. With the exception of sections of the city of Oroville, all other areas most affected by the fires have median home values well in excess of the national median – and in 8 of the 11 ZIP codes analyzed, the median home value is at least double the U.S. figure. The median home value in those communities range from $193,100 in the town of Oroville to almost $1 million in the community of Glen Ellen.
Homes are so pricey in this region partly because of its natural beauty, its proximity to the booming San Francisco Bay area – both of which attract plenty of would-be homeowners – and its relatively small housing stock. This strong demand, coupled with limited supply, have led local home values to rise quickly lately. In eight of the 11 most-impacted ZIP codes analyzed, home values grew 8.1 percent or more over the past year, faster than the already quick 6.9 percent pace of annual appreciation nationwide as of August.
People displaced by the wildfires are likely to find it challenging to find another home for sale nearby. In many areas, inventory was already down by more than 10 percent – in some areas more than 20 percent – year-over-year in August. And that’s before fires burned down thousands of homes in the area, reducing would-be inventory in an already slim market.
Families looking to rent a home may not fare much better, especially if they are trading in the relative stability and affordability of a long-term mortgage for the area’s expensive – and rapidly rising – rents. Median rent in Napa and Sonoma counties was $2,636 and $2,633 per month, respectively, in August, almost double the national figure of $1,430. Annual rental growth in Napa County was largely flat, but rents rose 4.5 percent year-over-year in Sonoma County in August, more than twice the national growth rate. Finding temporary housing outside the area, including the nearby larger cities of San Francisco or Oakland, may be an option but will come at a cost: Median rent in the five-county San Francisco metro area as of August (including San Francisco, Marin, Contra Costa, Alameda and San Mateo counties) was a whopping $3,377 per month.
With roughly a dozen large fires still burning in and around California’s Napa and Sonoma counties, the true extent of the damage remains unknown – but it continues to climb as fires move and weather conditions change. It’s still too soon to make a true assessment of the number and value of homes destroyed, and it could take years for the area to rebuild. And the situation may get worse before it gets better: Even short-term disruptions in housing supply, and an influx of new renters and would-be buyers, are likely to push prices up even further. It’s clear the human cost of the California wildfires is already enormous, and likely to grow, in a region notorious for moving slowly to address long-standing housing shortages.