The devastating wildfires in California have put over $40 billion worth of residential properties at risk, forcing many homeowners to confront the reality of rebuilding—or relocating. While this may seem like an issue confined to the West Coast, the ripple effects of these disasters can be felt across the country, including right here in Iowa’s real estate market.
Rising Insurance Costs Nationwide
One of the most immediate consequences of large-scale natural disasters is the rise in homeowners’ insurance premiums nationwide. As insurers absorb record-breaking losses from fire-related claims in California, they adjust their risk models and raise premiums across multiple states—including Iowa.
Iowa has already seen a steady rise in insurance costs, with some homeowners experiencing double-digit percentage increases in premiums over the past year. These rising costs aren’t just affecting homeowners; landlords are also paying more for coverage, which in turn drives up rental prices. As a result, both prospective buyers and renters in Iowa are feeling the financial strain, even if they live thousands of miles from the wildfires.
Displaced Homeowners: A Shift to the Midwest?
With affordability and insurability becoming major concerns in California, some displaced homeowners may look to rebuild their futures in more affordable regions—and that includes Iowa. The Midwest has long been an attractive option for those seeking a lower cost of living, stable housing prices, and job opportunities in growing metro areas like Des Moines, Cedar Rapids, and Iowa City.
We’ve seen migration trends in the past where natural disasters, high living costs, and climate concerns push people from coastal states to less disaster-prone regions. If Californians make their way to Iowa, this could put additional pressure on housing inventory, further driving up home prices in an already competitive market.
Unforeseen Consequences: How California Impacts Iowa
Beyond insurance costs and migration, California’s crisis could have additional unexpected consequences for Iowa’s housing market:
- Increased Construction Costs: With large-scale rebuilding efforts in California, the demand for materials like lumber, concrete, and steel could skyrocket. This could drive up costs for new home construction in Iowa, making it more expensive to build or renovate homes.
- Strained Supply Chains: The impact on labor and material supply chains could delay housing projects nationwide, including in Iowa, where construction timelines are already being stretched by labor shortages.
- Higher Property Taxes: As more states see increased insurance claims and disaster relief expenses, some municipalities may look to adjust property tax rates to compensate for revenue gaps. Even in Iowa, this could mean higher costs for homeowners over time.
Looking Ahead: Preparing for the Ripple Effects
While the connection between California wildfires and Iowa real estate may not be obvious at first glance, the housing market is an interconnected ecosystem. From rising insurance costs to shifting migration patterns and construction delays, the impact of one state’s disaster can be felt nationwide.
For Iowa homeowners, buyers, and investors, being aware of these trends is key to making informed real estate decisions. Whether it’s adjusting budgets for rising costs, keeping an eye on migration patterns, or understanding the broader market implications, staying ahead of these changes will be crucial in the years ahead.
ABOVE: A new hospital hire at the University of Iowa Hospitals and Clinics lost their home in the California fire and is relocating their family to Iowa City.
