Wildfire warnings accompany California’s older home sales

California has become the first U.S. state to require homeowners selling older properties in high-risk wildfire zones to disclose not just a house’s vulnerabilities, but also steps taken to reduce those risks.

The new mandate took effect in July and applies to houses built before 2010 – when the state strengthened building codes to withstand wildfires, Bloomberg reported.

Sellers must identify wildfire hazards such as wood-shingle roofs, uncovered vents, single-pane windows and nearby vegetation. They must also indicate whether they’ve taken action to mitigate those threats.

Experts say the law could reshape California’s housing market as climate-driven disasters intensify.

“When you require disclosure, you see effects on home prices,” Margaret Walls, a senior fellow at Resources for the Future, a Washington, D.C.-based research institute, told Bloomberg.

She added that buyers tend to pay more for properties perceived as safer, which could encourage sellers to invest in upgrades.

Vast majority of California homes are older

Nearly 91% of California homes were built before 2010 — including 2 million in wildfire-prone areas.

About 3% to 4% of single-family houses come on the market each year, Bloomberg said.

Whether buyers act on wildfire information is less certain. California already mandates dozens of disclosures — from plumbing fixtures to potential contamination from lead paint or meth labs.

“You can give people too much information such that they ignore all of it,” said Matthew Kahn, an economics professor at the University of Southern California.

Still, Kahn’s research suggests targeted climate disclosures matter.

A 2023 study he co-authored with Redfin showed that users who viewed detailed flood risk data subsequently searched for homes with lower risk, influencing sale prices.

“For those homesellers who can demonstrate that they’ve taken proactive steps to protect their homes, they’re going to sell for a price premium,” Kahn said. “Those homeowners who haven’t taken these steps are going to sell their home for a lower price than they would’ve if they hadn’t had to disclose this stuff.”

Possible insurance impact

As insurers scale back coverage in fire-prone areas, they increasingly look for evidence of risk reduction.

Seren Taylor, vice president of the Personal Insurance Federation of California, said the disclosure comes at the right time.

“The point of sale is clearly a terrific opportunity to start to get home hardening built into older housing stock,” he told Bloomberg.

California will go further in 2029 when it begins enforcing rules requiring property owners in high-risk zones to remove vegetation and combustible materials within five feet of structures.

Bloomberg said some cities already have such ember-resistant zones in place.