According to HousingWire, a new analysis from Cotality estimates that more than 2.5 million properties across ten western states face moderate or greater wildfire risk, with a reconstruction cost value of roughly $1.4 trillion. While California remains the most exposed state, the report highlights that nearly half of all at-risk properties nationwide fall outside California's borders, with Colorado and Texas showing particularly substantial exposure alongside rapidly growing metros like Austin and Denver.
What makes this analysis different from traditional wildfire modeling is its focus on conflagration, which is when fire spreads from one home to another within neighborhoods rather than just burning structures in isolation. Cotality found that accounting for this home-to-home spread risk can raise a property's risk score by as much as forty points, pushing areas previously considered low risk into moderate or higher risk categories. This shift could have significant implications for how lenders evaluate properties and how insurers price coverage.
The report also looks at mitigation, measuring how well individual properties are protected through things like defensible space, fire-resistant roofing and vents, and neighborhood fuel management. Homes in the top tier of mitigation performed dramatically better than unprepared properties, with the best-protected homes showing expected losses roughly seventy-eight percent below statewide averages, while the least-prepared homes faced more than ten times the average loss expectations.
At the metro level, Los Angeles carries the highest exposure with nearly 250,000 at-risk properties, but interestingly, four of the top ten most-exposed metros nationwide are outside California, with Austin leading the non-California list. This matters because it suggests the wildfire insurance and underwriting challenges we typically associate with California are increasingly becoming a nationwide issue affecting how lenders, insurers and investors view risk across the West.
What I am seeing locally here in the Bay Area and across the East Bay is that this kind of granular risk assessment is becoming essential for anyone involved in real estate transactions. As insurance carriers become more selective about where they'll write coverage, buyers and sellers need to understand not just whether a property is in a high-risk zone, but what specific mitigation measures could actually move the needle on insurability and value.
