Vallejo residents Theresa and Daniel Ochs found the perfect place to spend their retirement years: a three-bedroom home on two acres in Garden Valley, in verdant rolling hills a few miles from the Eldorado National Forest.
"You should go see it," Theresa Ochs said. "It's got craftsmanship in there. The woodwork is amazing. It's got a nice chef's kitchen. I could just see myself waking up in this house."
The couple made an offer -- and then encountered a nasty surprise. One insurance company after another refused to sell them a homeowners' policy because of the wildfire risks in El Dorado County. The Ochses reluctantly withdrew their offer last week.
California's wildfires have found yet another way of doing serious harm to rural California -- by hammering its housing market.
The refusal of insurance companies to cover homes in fire-prone areas is prompting home buyers to cancel purchases and look elsewhere.
That's depriving struggling rural areas of one of their most reliable sources of economic oxygen -- the steady influx of well-off retirees and other transplants from Sacramento, the Bay Area and other prosperous areas.
"It's another ... hardship that's hit because of the wildfire issue," said economist Jeff Michael of the University of the Pacific. "We tend to see lower incomes in those areas. People are attracted to them by the housing affordability and rising insurance costs put a real dent in that."
Pounded by two straight years of catastrophic wildfires, insurers are raising rates, abandoning long-standing customers and refusing to write new policies. Many homeowners are forced to purchase from unregulated "surplus" carriers or the California FAIR Plan, a bare-bones policy that acts as the state's insurer of last resort. The resulting coverage can cost up to triple what a traditional carrier would charge. Some desperate homeowners are getting quotes of up to $10,000 a year.
Realtors said this translates into lost business. Home buyers give up on purchases, or their lenders scuttle the deal because the borrowers no longer qualify for their loan.
There are no official estimates on how the insurance crisis is killing real estate deals during escrow. But Ken Calhoon, a real estate broker who lives in the Pilot Hill region of El Dorado County, said as many as 10% of the deals in his area are falling through "because insurance is either unavailable or the premiums are just too high. Buyers just don't expect that kind of cost."