Older homes for sale in California now come with wildfire warnings

By Todd Woody Bloomberg The majority California homes were built long before the state required that they be constructed to withstand wildfires Now sellers of older homes in high-risk areas must disclose to prospective buyers not only a dwelling s susceptibility to fire but what they ve done to address those vulnerabilities As conditions change intensifies natural disasters states across the US have been mandating that home sellers disclose risks such as flooding But the California disclosure is the first to zero in on a property s ability to survive a catastrophe Related Articles Map Garnet Fire stubbornly burning reaches McKinley Grove PG E gives update on fire season forecast machinery How to defend a home from wildfire UC Berkeley researchers lessons from infernos California s hills are ready to burn as the Diablo Wind season nears Burned batteries from Moss Landing power plant fire will be trucked to Nevada That could make the state a model as wildfire and other conditions threats endanger homes across the US While three dozen states require selected degree of flood-risk disclosure only California at this time mandates home sellers reveal wildfire hazards When you require disclosure you see effects on home prices announced Margaret Walls a senior fellow at Information for the Future a Washington DC-based nonprofit research institute RELATED How to defend a home from wildfire UC Berkeley researchers lessons from infernos Walls and other economists research has shown that disclosing circumstances risks results in lower home prices but that buyers are willing to pay more for safer properties That in theory should motivate sellers to improve their homes resilience to weather risks But such outcomes need to be validated by further research according to Walls The new California rule requires sellers to list specific features that endanger a house including combustible roofs uncovered vents single-pane windows and vegetation within five feet meters of a building Real estate disclosures showing the seller has remedied such threats could help buyers when they apply for homeowners insurance according to experts Whether a sale goes through is increasingly contingent on a home s insurability as insurance companies reduce their exposure in disaster-prone areas that are seeing more fires and floods Insurers in these very high hazard severity zones are going to ask homeowners to do all these things announced Jennifer Valdez a fire inspector for the Monterey Fire Department in California where of the city is subject to the wildfire disclosure rules Seren Taylor vice president of the Personal Insurance Federation of California a lobbying group for the state s major carriers mentioned that in high-risk areas insurers will give preference to homes that have reduced wildfire threats The point of sale is clearly a terrific opportunity to start to get home hardening built into older housing stock he noted Nearly of California s homes was built before and there are million dwellings in high-risk wildfire areas About to of single-family houses come on the sector annually Do environment disclosures work What remains unknown is to what extent real estate disclosures compel sellers to preemptively improve wildfire resilience or how much buyers are paying attention to the warnings amid a deluge of disclosures that accompany the sale of a house This is particularly true in California which also requires home sellers to flag among other things water-hogging toilets realizable contamination from lead paint and meth labs and the likely presence of nearby gas pipelines and registered sexual offenders You can give people too much information such that they ignore all of it mentioned Matthew Kahn an economics professor at the University of Southern California A paper he co-authored however revealed that targeted climate-related disclosures can influence home buyers Working with Redfin Corp Kahn and his colleagues randomly provided more than million users of the real estate institution with detailed flood pitfall information on each property they viewed and then tracked the actions they took They detected that people who looked at homes with high flood scores subsequently searched for properties with lower flood ratings Homes with high flood jeopardy sold for lower prices while buyers paid more for those that were less exposed Kahn reported further research is needed but he sees California s wildfire disclosures as potentially having a similar effect For those home sellers who can demonstrate that they ve taken proactive efforts to protect their homes they re going to sell for a price premium he explained Those homeowners who haven t taken these approaches are going to sell their home for a lower price than they would ve if they hadn t had to disclose this stuff An analysis Walls co-authored published in the journal Land Economics determined that older homes in California sold for nearly less when subject to a general wildfire disclosure She mentioned correlating home sellers and buyers particular actions with the new disclosure requirements will prove challenging You don t really know how people interpret the information they re given mentioned Walls But drawing attention to these risks may make people step up and do more California s wildfire disclosures California enacted a two-prong wildfire disclosure law in after a series of destructive conflagrations The first part took effect in and requires home sellers in zones the state designated as having high and very high fire hazard to provide buyers with documentation that they ve complied with restrictions on vegetation around a house that could ignite the structure called defensible space The second provision the new home hardening disclosure went into force in July and applies to homes built before Sellers appear to be complying with the requirements according to Gov Hutchinson assistant general counsel for the California Association of Realtors a business group It s another disclosure it doesn t seem to interfere with sales he mentioned To document that they ve complied with defensible space regulations home sellers must request an inspection usually from their local fire department Alternatively the buyer can agree to obtain such documentation after the sale closes Home sellers will have more work to do in the coming years as the state begins enforcing regulations in that require owners of existing homes in high-risk wildfire areas to remove vegetation and other combustible material within five feet of the building Selected cities already require such ember-resistant zones Valdez the fire inspector mentioned parcels in Monterey and two adjoining communities are subject to the disclosure law That includes much of Carmel-by-the-Sea a village of s storybook cottages with highly combustible wood-shingle roofs Her department does about to pre-sale inspections per month and conducts annual defensible space inspections Maybe it s because of insurance or seeing these devastating fires but people are doing the work around their houses and are starting to take the procedures that they can afford to start doing the home hardening reported Valdez More stories like this are available on bloomberg com Bloomberg L P