
If you’ve read our article on climate change, you already know that it’s contributing to the increasing frequency and severity of extreme weather events. California, long known for its wildfires, is no exception.
First of all, NOVA stands in solidarity with everyone affected by this devastating natural disaster. We extend our deepest sympathies to those who have lost family members, friends, and homes, being left on the street with nothing. To the firefighters, volunteers, medics, and countless others risking their lives to save others—the world sees your courage. Stay strong and safe! |
A closer look at the impact
One common misconception is that those who lost their homes in the wildfires were predominantly wealthy and could easily afford new ones. While many properties in the affected areas are indeed valued in the millions, the reality is more complex. Many homeowners purchased their properties decades ago, benefiting from significant appreciation over time. For many of these individuals, their homes were their primary source of wealth. These were homes that could have funded their retirement or paid for a grandchild’s education. Now, they’ve lost it.
The insurance market
Even before these wildfires, California was in the middle of an insurance crisis. The rising frequency and intensity of natural disasters have forced many insurance companies to either leave the state or significantly hike their premiums. According to those insurers who left the state, the premium increases approved by regulators simply weren’t enough to cover their losses, especially after past wildfire seasons.
Now, with the 2025 Southern California wildfires shaping up to be one of the most destructive in the state’s history, this crisis will only deepen.
Let’s not forget how this directly impacts the housing market. Insurance is not just a nice-to-have; it’s mandatory if you’re using a mortgage to buy a home. Mortgage lenders won’t approve loans without it. And if annual premiums climb too high, many borrowers may no longer qualify due to debt-to-income ratio limits.
The state will need swift and effective action – through new rules and policies – to stabilize its insurance market.
Housing prices and affordability
Even before the fires, Los Angeles was already facing a housing affordability crisis caused by the housing shortage which had priced out many potential buyers. Now, with so many homes destroyed and more people displaced and in immediate need of housing, the supply-and-demand imbalance has grown even worse.
What happens to property prices after wildfires? Studies by Redfin show that prices can drop in the short term, as fire-damaged homes or lots requiring debris removal often sell at a discount. But that decline doesn’t last. Over the medium and long term, prices usually rise as new homes – built with modern, often more expensive, fire-resistant materials – replace older structures.
The rental market
California’s price-gouging law prohibits landlords from raising rents by more than 10% during a state of emergency. But in practice, there are serious loopholes. Some local real estate agents are already seeing illegal rent increases of 15–20%.
Still, amidst the darker side of these events, there are stories of hope and generosity. The Oppenheim Group, for example, has offered its services for free to those who lost their homes. Coldwell Banker Realty set up a tent outside an emergency center in Westwood, providing guides like Navigating Life After Wildfire Displacement. Some real estate agents are even working overtime without charging commissions to help displaced families. A quote, often attributed to the writer Erich Maria Remarque, would be appropriate here: “In dark times it is well visible light people.”
How will wildfires affect the neighboring states?
The wildfires’ impact won’t stay confined to California. Neighboring states like Nevada are likely to see an influx of people and slight changes to their real estate markets.
Even before the fires, many Californians were already leaving the state due to its high living costs and social problems. Wildfires can motivate them to relocate even more, and not just due to the risk of new fires and the wish to find a safer place to stay, but simply because people who used to live in their own house and lost it, will have to rent for a long period of time will be simply priced out. The same is possible to say about long-term renters, who were able to save good rental prices due to their old lease agreements, but now have to look for a new place to stay and face the current market prices and extremely high competition.
While the Los Angeles area will most probably remain popular, many people who’ve left because of the fires may find it impossible to return – especially if their homes were uninsured. There is a risk that over time, it seems likely that only the wealthiest will be able to afford to live in beautiful but high-risk areas.
Conclusion: A planet in need of action
There are currently many theories, including conspiracy ones, developing around the causes of the Southern California wildfires. Whether to believe them or not is up to everyone. However, natural disasters are becoming more frequent and more destructive.
If we want to protect our homes, our communities, and our future, action must be taken – sooner rather than later.
Invest in reliable real estate projects with Headway NOVA. Install the app now →
Follow NOVA on Facebook and Telegram to catch the latest real estate trends.