Costs from California wildfires will be 'astronomical' as million-dollar homes burn

Devastating fires torched more homes and businesses in Los Angeles County on Wednesday, exploding in size and adding to the more than 1,100 structures that had already been destroyed by dawn, with one early estimate putting the potential damage at near $10 billion.

Even before the additional homes and apartments were destroyed, the largest of the fires – the Palisades Fire – was quickly pushing its way upward on the list of most destructive fires in the state's history with at least 1,000 destroyed structures. The fire had burned more than 15,000 acres, while the other large fire in the county, the Eaton Fire, had burned 10,600 acres and more than 200 structures, county officials said. At least five people were reported dead.

The acreage burned still paled in comparison to the hundreds of thousands of acres burned in the largest wildfires in the state's history, but that fact was offset by the real estate prices in the areas burning in Southern California, said Char Miller, professor of environmental analysis and history at Pomona College in Claremont, California and author of Burn Scars, a history of fire suppression in the U.S. published last September.

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"One of the realities in large fires that burn into subdivisions is the cost of the homes and the cost to replace the homes is astronomical," Miller said. "That may explain why the Palisades Fire and the Eaton fire are going to be so expensive."

An independent research team at the financial services company J.P. Morgan said earlier Wednesday that it expected the insured losses from the Palisades fire to approach $10 billion, with most of the economic losses in homeowners insurance.

The median home price in Palisades, an affluent residential area, is more than $3 million, the J.P. Morgan report stated, while the median home price in Butte County, where the Camp Fire burned in 2018, was less than $500,000.

The Camp Fire, the deadliest and most destructive in the state's history, burned over 153,000 acres and destroyed nearly 19,000 structures and the economic losses totaled about $15 billion, according to the J.P. Morgan report.

Pacific Palisades is one of the top-25 most expensive zip codes in the nation, said Firas Saleh, director of North American wildfire models at Moody's, a global research and analysis firm.

Moody's had not yet released preliminary loss estimates Wednesday but losses are likely to run in the billions of dollars given the high value of homes and businesses in the area, stated Jasper Cooper, vice president-senior credit officer, for Moody's Ratings, a credit ratings agency.

"The wildfires in the Los Angeles region have caused tragic loss of life and widespread destruction of property," Cooper said, adding commercial property losses could be significant.

Hundreds of firefighters battled high winds and extreme conditions on the five fires burning in the county on Wednesday.

To Miller, the more disturbing element of the state's large and destructive fires is how recent the record largest and most destructive fires have been.

Of the 20 wildfires that destroyed the most structures in California history, all of them have occurred over the last 33 years and 13 have occurred just in the last seven years, according to statistics from Cal Fire, the state's department of forestry and fire protection.

"Five of those were all burning at the same time in 2020," Miller said. "That was unheard of and terrifying in terms of evidence of climate change's outsized impacts on devastating fires in California."

Such large and rapidly growing wildfires have become all-too-familiar disasters in the state, which faces a multitude of challenges including high wind events, drought and a flood of homes and people pushing into wildlands, all of which can exacerbate big, dangerous fires, experts said Wednesday.

Saleh, with Moody's, noted the increasing complexities of the California fires.

"This wildfire in Southern California vividly illustrates the escalating challenges of wildfire management in such vulnerable zones," Saleh said. "The Palisades Fire, fueled by a combination of strong Santa Ana winds reaching speeds up to 80 miles per hour, critically low humidity, and persistent drought conditions, underscores the urgent need for comprehensive wildfire risk strategies."

The losses from this week's fires raise larger concerns brewing about the cost of insurance and how much people will be paid to rebuild, if they can rebuild at all, Miller said. "That's a central issue certainly in this state and in Florida with the hurricanes."

That conversation has been a steady drumbeat in Florida, where major landfalling hurricanes have wreaked massive economic losses in recent years, and in other locations that have seen an increase in the number of coastal flooding days and extreme rainfall.

Dinah Voyles Pulver covers climate change and the environment for USA TODAY. She's been writing about wildfires since the Florida firestorm of 1998. Reach her at [email protected] or @dinahvp on X and Bluesky.

This article originally appeared on USA TODAY: Damage, costs from California wildfires to soar into the billions