Why California’s housing market is destined to go up in flames

This story was produced in partnership with The Desert Sun.

Andy Domenigoni is no stranger to wildfires. 

On an October day in 1993, the rancher was on horseback herding cattle in the Southern California community of Winchester when what would become a 25,000-acre wildfire tore through the brush-filled hills. The fire blocked the route to his ranch, but he found a clearing and hunkered down for the night, emerging to find the area transformed into a “moonscape.”

“But hey, you rebuild or you move away. You only have a couple of choices,” said 72-year-old Domenigoni, whose family was among Winchester’s first settlers in the late 1870s. 

A decade later, that experience didn’t stop Domenigoni from developing thousands of homes on the family’s acreage. A plan for about 4,000 homes on the ranch was approved back in 2004, but put on hold “waiting for the economy to improve.”

The time is now, Domenigoni says. The median home price in California is hovering around $800,000, and as the state’s housing crisis pushes people inland in search of something they can afford, developers are taking an interest in this sparsely populated pocket of the Inland Empire, 80 miles from Los Angeles.

Once tract maps are approved to subdivide Domenigoni’s land, the 4,000 planned homes will join more than 7,500 others that are either built out, under construction, or in earlier development phases in Winchester, many of which are in the state’s “very high” or “high” fire hazard severity zones. And Riverside County’s planning documents for Winchester anticipate thousands more.

The seeds for these developments, planted years ago, are starting to take root.

The area’s dry chaparral valleys, which were all but empty just a few years ago, have begun filling up with hundreds of new tract homes that sit nestled between steep hills. As you drive along Domenigoni Parkway, a thruway named for Domenigoni’s ancestors, you can see clusters of homes spreading out in every direction, as well as graded pads and construction sites that foreshadow hundreds more.

The early stages of Winchester’s development boom began around the early 2000s, when new infrastructure like Domenigoni Parkway paved the way for housing development in the rural area. 

Andy Domenigoni holds a photo of his great-grandfather, one of the first settlers of Winchester, California. A sign on a tower welcomes people to the Domenigoni Valley and notes its establishment in 1879 by Angelo Domenigoni. Along Domenigoni Parkway, a sign advertises newly built homes. Jay Calderon / The Desert Sun

“The groundwork for homes was already laid, whether you liked it or not,” Domenigoni said. “If you were a person that was sitting on 10 acres, five acres, or one acre, [developers] went in and bought them up from landowners who wanted to get out or wanted to sell their property.” 

Most of these developments are tracts of just a few hundred homes. Builders have snapped up tract maps approved in 2004 and 2005 in areas prone to wildfires and each built hundreds of homes across the formerly empty landscape over the past few years, as the demand for housing rose. 

The homes could look like a welcome oasis for homebuyers in a state in the throes of a housing crisis driven by years of lackluster housing production. For potential homebuyers from the more expensive Orange, San Diego, and Los Angeles counties, the ability to buy a new home in the $400,000 to $500,000 range is tempting enough to uproot from their communities and move to Riverside County, even while maintaining lengthy commutes to their jobs elsewhere. 

But these idyllically named subdivisions like Lennar at Prairie Crossing, Tri Pointe’s Opal Skye at Outlook, and D.R. Horton’s North Sky are all in a zone that the state of California has classified as one of the riskiest parts of the state. A series of brush fires have torn through the area in recent years, igniting on dry grass and sweeping over hills before firefighters tamped them out. In the afternoon, strong winds rush down from the hills and into the new subdivisions.

While most California counties lost population in 2022, more people moved into Riverside County than anywhere else in California. Unincorporated Riverside County added the fifth-most new housing units out of all California municipalities that year, trailing only the more urban areas of Los Angeles, San Diego, Oakland, and San Francisco. And Riverside County cities often rank among the fastest-growing in California by population and housing units, as new housing developments pop up in the foothills to absorb the region’s growing population pushed out from more expensive coastal areas.

As Riverside County grows, the number of homes in the wildland-urban interface is growing, too. Between 2000 and 2020, the number of homes in these zones grew by over 165,000 units, according to data from the University of Wisconsin-Madison SILVIS Lab.

Housing in areas with high wildfire risk has become so common in Southern California that some residents are simply trading one risky area for another. Karen Maceno evacuated her previous home in San Diego County twice during wildfires before relocating to Winchester to be closer to her grandchildren. She’s intimately familiar with the experience of evacuating a brand-new home, and keeps an eye out for fires in the hills directly behind her home, but feels safer in new tract housing with easier access to main roads than she did tucked away in a San Diego canyon.

Fire retardant stains the hills above a housing development in San Jacinto, California, on August 18, 2023. The retardant was left over from the 2023 Ramona fire. Jay Calderon / The Desert Sun

“That was a brand-new gorgeous home, and you just don’t think, ‘God, this area is going to burn,’” Maceno said. “And of course, the weather has changed, it’s a lot drier and hotter. I’m always watching for smoke, but I feel less concerned because of what we’ve already been through.”

Winchester is only one example of a place where California’s climate and housing crises are converging, as the state grapples with a need for more housing development and wildfires that are increasing in frequency and intensity due to climate change. While the past few years have seen a series of highly publicized lawsuits over large developments in wildfire-prone areas, smaller developments have exploded in places like Winchester with little fanfare. 

Over the past two decades, as new construction has sprawled from major cities, an increasingly large share of new housing has appeared in risky areas like the fire-prone Inland Empire. In Southern California, as in other places around the country, developers are building millions of homes in areas that are vulnerable to climate disasters that include wildfire, flooding, and drought. More than 12 million new homes appeared in the wildland-urban interface between 1990 and 2010, and millions more have gone up in flood zones and coastal areas. Developers have spread out over slopes covered in flammable brush, built subdivisions right up against creeks and bayous in Texas, and flocked to the Florida shoreline. 

The reasons why are many. 

Some homeowners seek out risky areas like beachfronts and mountain forests because they like waterfront views or forest seclusion. Other people can’t afford to live anywhere else, so they move out to cheaper areas farther from big cities. Developers also choose to build in these far-out areas in order to avoid high construction costs and zoning laws that make building difficult: A recent paper from an economist at the University of California, Los Angeles, found that strict zoning laws in San Diego have caused at least 7 percent of the population growth in surrounding fire-prone areas. Finally, state and federal subsidies tamp down the cost of dealing with fires in these vulnerable areas, masking the true cost of living near wildfire danger. 

This complex web of policies has put millions of future homeowners in the path of wildfire, ensuring that many of them will experience future displacement and financial loss when blazes destroy their homes. Policy experts say that unwinding it will require not just changing laws and policies in places like Southern California, but also rebalancing whole housing markets to incentivize the dense, resilient construction that isn’t happening now.

“When you have what appears to be a significant magnitude of risk, but there’s a very low probability of it happening in any given year, it feels to people like it’s not going to happen to them, and there’s no incentive not to build,” said Sean Hecht, a law professor at the University of California, Los Angeles, and an attorney for the environmental nonprofit Earthjustice. “There’s still a market for housing everywhere, and I don’t see much movement to slow it down.”

Newly built homes abut the natural hillside vegetation of the Prairie Crossing development in Winchester, California.
Jay Calderon / The Desert Sun

If you want to understand why so many homes are appearing on Domenigoni Parkway, it helps to start almost a hundred miles west of Winchester, in Los Angeles. Many of the people who live in subdivisions like Prairie Crossing commute to the Los Angeles area for work every day, burning millions of gallons of gasoline a year, yet builders like Lennar and Horton choose to build out in the empty desert, rather than in the city. 

No one understands the reasons why better than Ted Handel.

Back in 2016, before the rush of sprawl development had arrived in Winchester, Handel took the helm of an affordable housing development company called The Decro Group. His first project was to build an apartment complex on a large lot just west of downtown Los Angeles, but it wasn’t long before he ran into problems. The street he wanted to build on was unusually narrow, which made design for the 64-unit project much more expensive. There was a historic house on the lot that Decro had to move, plus an abandoned oil well underneath the property that he had to plug. He managed to raise millions of dollars for the difficult construction job, but then he ran into trouble with nearby residents who thought the six-story building was too tall.

In order to get the project approved, Handel had to spend months wooing both the area’s neighborhood council and the Los Angeles city council. Even once he did that, he faced procedural appeals from neighbors who argued that the building would block their view of the sky and make traffic worse. The project finally opened up last year, seven years after Handel started on it, with rents capped at around $1,470, well below average. 

It sold out almost at once.

Los Angeles is in dire need of more housing: Around half of all households in Los Angeles County are housing-burdened, which means they spend at least 30 percent of their income on rent or mortgage payments, and a recent report from the real estate website Zumper found that the city has the eighth-highest median rent in the United States. But building more housing in the city is almost impossible: In the time it took Decro to build 64 apartments in downtown Los Angeles, builders stood up hundreds of homes in Winchester alone, laying out streets and water mains on empty desert.

The biggest reason why so much construction happens in the wildland-urban interface is that it’s far more expensive and time-consuming to build “infill” housing in dense areas like Los Angeles than to throw up new homes on vacant land. Even if a developer can find the money to finance a large building like Decro’s project in Los Angeles, getting permission to build it is another matter altogether: Most cities have strict zoning laws that regulate what developers can build on any given block, and these laws often prohibit any kind of multifamily development.

A sign welcomes visitors to Winchester, California. A new McDonald’s under construction on Domenigoni Parkway in Winchester, as seen on August 14, 2023. Jay Calderon / The Desert Sun

Local opposition doesn’t help. As millions of people have flocked to cities like Los Angeles and San Francisco, homeowners in those cities have tried to block new development by protesting at community meetings and taking developers to court. These anti-development activists have come to be known as NIMBYs, an acronym for “not in my backyard.”

A landmark 1970 law known as the California Environmental Quality Act, or CEQA, which gave Californians a legal weapon to fight harmful industries like manufacturing and petrochemicals, also made these NIMBY challenges easier by opening up lawsuits over almost any kind of “environmental impact,” including construction noise and shadows. This dynamic played out recently at a development in L.A.’s Los Feliz neighborhood: Developers wanted to build 96 apartments on the former site of a gas station, but neighbors held up the project by petitioning the city to block it, arguing that the building was “completely out of character and style for the neighborhood” and would worsen traffic. It took the better part of a decade to finish it.

“You can go through 10 years of brain damage trying to build an apartment building in San Francisco,” said Jenny Schuetz, a senior research fellow at the Brookings Institution who studies urban economics. “You can go out into undeveloped areas and build a single family subdivision in half the length of time.”

These regulatory and economic barriers don’t stop people from moving to boom areas like Southern California. Instead, they contribute to a massive pent-up housing demand, a demand that infill developers like Handel struggle to meet. When national home building companies enter a market to meet this demand, they seek out places where land is cheap and plentiful and where regulations are lax, which leads them to rural areas like Winchester. For one thing, land tends to be cheaper when it’s vacant and remote, which makes it much less risky for builders to embark on new subdivisions. 

Not only are these subdivisions much more carbon-intensive than infill projects, since they lock in car commutes for thousands of people who could be walking or taking public transit, they also tend to be located in areas that are more vulnerable to climate disasters. The earliest settlement in Los Angeles concentrated around the Los Angeles River basin, which sits in a flat and fire-free bowl close to the coastline. As developers march east into…

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