Fire activity in the Sierra Nevadas has led to a precarious position for property owners trying to renovate or insure their cabins. File photo.

In a state with a constant housing crisis, the Covid-19 pandemic didn’t help with California’s lack of vacant homes.

California has also had another catastrophe that is causing issues for housing: wildfires.

In recent years, California wildfires have caused record-breaking destruction. In 2019, PG&E agreed to a second large settlement over a Northern California wildfire — $11 billion to resolve insurance claims from wine country fires in 2017 and the Camp Fire in 2018.

In the Creek Fire of 2020 in Madera and Fresno counties near Shaver Lake, 71 residential, commercial, and other structures were damaged and 856 were destroyed, according to Cal Fire.

Wildfires have made it more difficult to sell and insure homes in mountain areas like Oakhurst, but even with the risk of wildfires, people are still willing to build a home in the hills.

Donna Pride is a broker associate with London Properties in Oakhurst, working in eastern Madera county and part of Mariposa in areas including the Raymond, O’Neals and others due north.

Pride said that 2019 was one of her best years for home sales in these areas, and 2020 wasn’t even too bad, despite the aftermath of the Creek Fire and the disruption brought by Covid-19.

After the Creek Fire, Pride said that people were still moving into the area — mostly from Southern California and the Bay Area because of lower property and home prices, lower crime rates and the natural landscape.

People are also buying homes in the area as a second home, or a vacation home.

“Our inventory is low and the demand is up,” Pride said. “Because of all the agents up here, when something hits the market, we get multiple offers on properties which is causing the prices to go up.”

There has also been an increase in sales for cabins and ranches, as well as lakefront areas such as Bass Lake and mobile home parks.

 

Insurance

A major drawback when it comes buying a home in mountain areas: home insurance.

Because of the Creek Fire and other fires of the past, fire insurance rates are high, and Pride tells her clients to start shopping for insurance immediately.

The farther away a home is from a fire station, the more likely insurance rates will be higher. Buyers may have to wrap a fire insurance plan with a different home insurance plan in case of other disasters such as floods.

“Sometimes you pay the price to live in the beautiful Sierras,” Pride said.

Brian Harper, an insurance agent with Farmer’s Insurance in Oakhurst, said that Farmer’s foresaw an upcoming problem with fire insurance in 2012.

Harper said that prior to 2012, there were less restrictions and homeowners could get insurance from just about any carrier — and prices were reasonable. In 2012 Farmer’s decided to take a more cautious approach, creating an underwriting guideline called a fire line score. If a home’s fire line score is too high, it would be ineligible for coverage.

“They stopped writing a lot of new homes, and in the years to follow, most of the other preferred insurance carriers did the same. What we did as agents was write insurance through specialty carriers that still had some tolerance,” Harper said.

After 2018’s Camp Fire, Harper said that most insurance carriers stopped writing insurance.

If all else failed, agents would go to the surplus lines insurance market. That protects against a financial risk that is too high for a regular insurance company to take on.

The surplus lines insurance came with higher premiums, but it was the best option for homeowners who couldn’t get insured traditionally.

After the Camp Fire, the surplus lines market pulled out for fire insurance around February 2019.

Homeowners last resort now is the California FAIR Plan, an insurance association that offers coverage to high-risk homeowners and renters in the state who have trouble obtaining coverage through another provider, but Harper said that it was not designed to be the fire insurance agent that it is becoming.

Harper said the issue was getting attention at the governor’s office, but after Covid-19 hit, the insurance crisis was put on the backburner.

“Insurance companies right now are being conservative and doing what everyone else is doing, but there is not a lot of innovation or risk taking going on. No one insurance company can take on that risk, so it has to be some kind of plan where the risk is shared amongst other people, but from the chair that I’m in, I’m not hearing of anything coming to help,” Harper said.

 

Rebuilding

Warren Best, president and CEO at James C Best and Son General Contractors Inc. in Oakhurst , which has been building and remodeling homes and home additions in eastern Madera and Mariposa counties since 1967, said that demand for construction changed in aftermath of the Great Recession, with much less construction for new homes and more remodeling for existing homes.

Best said that prior to that, around 80% of the work was for new home construction and 20% for remodeling, but after 2010, the figures had flipped.

After the 2018 fires, figures for new home construction and remodeling have stayed the same.

People are spending $30,000 to $100,000 to renovate their homes, Best said.

The people that do renovate their homes tend to keep the homes, even with the risk of wildfires.

To help better protect their homes against fire, more people are making their decks out of composite materials, but that also has to do with a redwood lumber shortage.

The Covid-19 pandemic did cause disruption to construction, Best said, with delays in delivery of appliances and materials, and companies changing their inventories.

Even with the fires and the pandemic, Best said he is becoming more optimistic with more people constantly moving to the Central Valley.

“I think we are going to have quite a bit more construction in 2021 if we can this Covid thing past us,” Best said.