Real estate headlines can get stale quickly, so we have to be really aware of what we’re saying. Is it still even true? Here’s an example of what I mean.
Headlines in recent years: Rising fire insurance rates in California are causing buyers to pull back from more rural areas.
New stats that change the narrative: In El Dorado County this past year we actually saw a larger increase of sales volume WITHIN areas that have higher fire insurance. Take a look at this visual. Typically El Dorado Hills & Cameron Park don’t have fire insurance issues whereas the rest of El Dorado County does (generally speaking). In short, volume in “fire areas” grew more than areas without issues.
Off the charts: Here is a visual to show how off the charts sales volume has been in El Dorado County. There was an initial COVID dip early in the year and then a massive increase WAY beyond normal.
QUICK TAKEAWAYS:
1) The market is always changing, so we need to be sure our narrative is informed by actual data instead of headlines from last year.
2) Uncertainty about fire insurance rates clearly didn’t hold back buyers this year in El Dorado County. Part of this could stem from rates regulating and buyers getting used to higher rates, but there is no mistaking El Dorado County had enormous pandemic migration. Thus incoming buyers simply cared way more about having land and space than fire insurance rates.
3) I’ve only run stats for El Dorado County, so I’d be careful about saying fire insurance is no biggie throughout California. Moreover, this trend could change in coming years. It’s actually very difficult to parse fire stats for Placer County. If anyone has ideas for how to do that I’m open ears. I just haven’t found a way yet.
VIDEO MARKET UPDATE:
Yesterday I did a big market update at Joel Wright’s Residential Roundup event. This is 38 minutes. Enjoy if you wish or skip to the last slide with closing thoughts to focus business in 2021. Watch below (or here).
PRESENTATION TODAY: I’m speaking at a Placer County Women’s Council of Realtors event from 10-11:30am. I’ll have one hour to unpack the market and I have some fresh Placer and El Dorado stats too. Sign up here.
Thanks for being here.
Questions: What are you seeing in El Dorado County or other areas? What are you hearing about fire insurance? I’d love to hear your take.
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Well El Dorado sure bucked the headline. LOL. Great stuff Ryan.
For sure. In a big way. I find it’s easy to sort of repeat narratives from the past, but it’s time to bust out some new vocabulary here. 🙂
Great job Ryan. Interesting idea.
If you can find a fire risk map, you might be able to draw the risk areas on Metrolist maps. I’m going to play with this if I ever have time.
Thanks so much Joe. I’m so fascinated by this. I like your idea too. This is not easy to dissect fire vs non-fire. I have an email in to an insurance agent this morning as we look to Placer. For now though we’re seeing what looks like excessive demand for outlying areas trumping fire insurance costs. Let’s see how long the trend continues AND whether other areas reflect the same thing.
Our primary market is the EDH area and this is certainly consistent with what we experienced. Wondering how this compares to Sacramento and Place County? Many thanks.
Nick
Thanks Nick. I appreciate hearing the inside scoop. I do have stats for the region. El Dorado definitely outpaced any other local county. Of course part of the reason why El Dorado has sensational stats though is there are less sales. But there is no mistaking increased migration regardless of a smaller dataset. I’ll have to expand my data table at some point as that would be fascinating. Otherwise in my second post this year I did have a big market update where I published some county volume trends.
Great post, Ryan. Could the migration to more rural areas have anything to do with people wanting to get away from more populated areas due to COVID? Just a thought since I have heard that theory tossed around for other areas although those other areas may have been a lot more populated. Keep up the great work.
Thanks Tom. This increased volume is definitely related to the pandemic, but I don’t think people are leaving due to safety from COVID. I think they’re leaving more because of lifestyle and the desire for more space and land. Thus I wouldn’t call this an urban exodus per se as I don’t know that people are technically leaving Downtown Sacramento to the Foothills, but there is absolutely something going on with people craving more space and wanting serenity despite high fire insurance rates. Hope you’re well.