Although the Maui wildfires are top of mind for most of the country right now, CoreLogic’s newly released 2023 Wildfire Risk Report declares the states of California, Colorado, and Texas lead the nation in the number of homes at risk of wildfire damage.
The annual report utilizes data to quantify the magnitude of wildfire risk across 14 western U.S. states in terms of the number of residential properties and their associated total reconstruction cost value.
In California, more than 1.2 million homes with a combined reconstruction cost value of more than $760 billion are at moderate or high risk of wildfire damage. In Colorado, more than 300,000 homes with a total reconstruction cost value of $140 billion are at risk, followed by 200,000 homes in Texas with a total reconstruction cost value of $85 billion.
According to the National Oceanic and Atmospheric Administration National Centers for Environmental Information, the number of acres burned each year has steadily increased since 1983. The average number of acres burned between 2010 to 2022 is 93% higher than that from 1990 to 2000.
Shifting climate patterns and extreme weather events, including the return of the El Niño phase of the El Niño Southern Oscillation and the atmospheric rivers in California last winter, could exacerbate risk and lengthen the wildfire season in the western U.S.
The organization reports wildfire risk is not static, and it is imperative to understand that a changing climate could alter the risk landscape in the future. Leveraging CoreLogic’s Climate Risk Analytics, it is possible to assess the potential increased wildfire costs by decade and climate scenarios. The analysis revealed that California's residential average annual loss may increase by 31% and 41% by 2050 under a moderate and extreme increase in greenhouse gas and aerosol emissions, respectively.
In addition, insurers must deal with the increasing cost of reconstruction materials and labor, which has inflated the overall cost of wildfires. In the past five years, CoreLogic estimates that reconstruction costs in California have increased by 33.5%.