Redfin: Affordability lures buyers to wildfire risk areas
More homebuyers considering high wildfire risk areas choose affordability over safety, according to a new Redfin analysis. Over the 12 months ending August 2020, homes in high-wildfire-risk zip codes sold for an average of $640,000, 3.9% less than the $656,000 average price tag in low-risk zip codes, marking a trend reversal from eight years earlier.
In 2012, homes in high-risk areas sold for an average 2.5% more than in low-risk areas, according to Redfin’s own housing market and U.S. Forest Service data from 2,700 zip codes in California, Oregon and Washington.
Since 2012, the median home sale price has increased 101% in zip codes with a low wildfire risk—compared with 88% in high-wildfire-risk zip codes.
This price disparity between low-risk and high-risk areas, “exacerbates the affordability crisis in low-risk areas,” by forcing homebuyers who cannot afford properties in low wildfire risk areas to choose more fire-prone regions for affordable homes, the report finds.
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, analysts wrote. In 2020, double-digit price growth in already expensive West Coast cities “has likely driven homebuyers to look in more affordable, but fire-prone areas.”
Data show in San Francisco the median home sold for $1.45 million in September; while in more high-risk areas such as Santa Rosa the median price in September was $690,000, and in Sacramento $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 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.”
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, according to Redfin.
Competition is more intense in areas with low wildfire risk, with 42% of homes sold over the past three years going under contract within two weeks. Meanwhile, in high-risk areas, only 33% of homes found buyers as quickly.
“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 Daryl Fairweather, Redfin’s chief economist. “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,” but migration to high-risk areas could slow.
Currently, people still are migrating to places that have suffered through wildfires or smoke in California and parts of Oregon because homes in those places seem like a good deal, explained Fairweather. Yet, 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,” he added.
CA court rules slum properties to their own costs
As recent wildfires were being contained throughout Northern California, the First District Court of Appeal released a receivership property nuisance ruling. It maintains, slum housing or burned and/or abandoned structures that become a neighborhood problem, legally referred to as nuisance property abatement, should not be “held hostage to a receivership property’s debt load.”
According to health and safety receivership abatement services provider California Receivership Group, (CRG), the opinion in County of Sonoma v. U.S. Bank N.A. as Trustee, details and reaffirms a precedent established in 1915 by the California Supreme Court, which called for nuisance properties “to pay their own costs of repair, even if the property has an existing loan on it.”
Since receivership gives a lender ownership as an alternative to a foreclosure proceeding, or to a trustee in the case of bankruptcy proceedings, court-appointed property receivers have custodial responsibility of the property. As a result, the lender or the trustee become the managers of the receivership property that serves as the collateral for a loan in default.
If owners or other interested parties fail to put an end to the dangers or other nuisance such properties may bring to a neighborhood, CRG says, a trial court “can authorize priority receiver’s certificates to fund the abatement work that the parties will not do.”
In the toughest and most dangerous repair, demolition or clean up cases however, it becomes necessary to administer health and safety code receiverships that, instead of using taxpayer money, use the property, soa property pays its own abatement costs.
The opinion reiterates that the purpose of H&S §17980.7(c) receiverships is “to clean up nuisance properties that present a danger to the community,” regardless of the existing debt on a property, “as the point of the remedy is abating the risk nuisance conditions present to communities.”
The appellate matter, according to CRG, was that “mortgage lenders with a preexisting interest in the receivership property challenged their subordination, seeking to set up a circuit split with a recent 2nd District Opinion.” (City of Sierra Madre v. SunTrust Mortgage, Inc. (2019) 32 Cal.App.5th 648).
Denied on May 22, 2019 – the review reaffirmed “a trial court’s right to subordinate lenders where necessary.” Furthermore, Sonoma County reported it analyzed the legislative history, finding in favor of the intention of the H&S statute 30 years ago to maintain the status quo, “that trial courts could subordinate lenders if they found it was justified.”
Charlotte N. Corley appointed to BancorpSouth Board of Directors
The BancorpSouth Bank Board of Directors has appointed Charlotte N. Corley of Starkville, Mississippi as a director of the company, effective October 28, 2020.
Formerly serving as commissioner of the Mississippi Department of Banking and Consumer Finance (DBCF), Corley retired from the DBCF in January 2020 after 34 years of distinguished service.
“We’re thrilled to add Charlotte Corley to the BancorpSouth Board of Directors,” said Dan Rollins, chairman and CEO of BancorpSouth. “She is well respected across the banking industry, and we’re fortunate to be able to leverage her vast experience and knowledge to enhance our efforts in serving our customers and communities.”
Prior to joining the DBCF as a bank examiner in 1985, Corley began her career in the banking industry at Great Southern National Bank.
At DBCF, she rose through the ranks becoming the banking division director in 2000, then deputy commissioner in 2013 and finally commissioner in 2014. During her tenure as commissioner, assets of state-chartered banks in Mississippi increased by nearly 50% from $60 billion in 2014 to almost $90 billion in 2019.
Corley has played an instrumental role in shaping the banking industry through her work with the Conference of State Bank Supervisors (CSBS), where she served as Chairman, from 2018 to 2019. She is a former member of CSBS’s State Supervisory Processes and Technology Committees, and the former chair of its Education Foundation.
She also served as a member of the Federal Financial Institutions Examination Council’s Task Force on Examiner Education, and was a longstanding member of the Interagency Supervisory Processes Committee.
Corley earned a bachelor of business administration degree in banking and finance from Mississippi State University in Starksville, Mississippi. She is a graduate of the Louisiana State University Graduate School of Banking and the American Bankers Association’s National Graduate Trust School at Northwestern University.
“I look forward to working closely with the company’s management and board members to contribute to BancorpSouth’s continued future growth and success,” Corley said.
Headquartered in Tupelo, Mississippi, the $24 billion asset company operates 310 full-service branch locations, and additional mortgage, insurance, and loan production offices in Alabama, Arkansas, Florida, Louisiana, Mississippi, Missouri, Tennessee and Texas, including an insurance location in Illinois.
Amilda is a journalist and branding consultant interested in how entrepreneurs turn brilliant ideas into products and services that advance business acumen and improve people’s lives in unprecedented ways. She has covered mortgage finance for over 15 years.