The Oakland Hills are home to a stunning condo complex that represents a microcosm of California’s growing housing insurance catastrophe. Parkwoods, a 400-unit community nestled among evergreens with breathtaking views, has become a stark example of how insurance providers are systematically decimating property values in fire-prone regions.

In 2023, Farmers Insurance abruptly dropped the property, citing excessive wildfire risk. This decision triggered a domino effect that has dramatically impacted homeowners. Previously insured for up to $155 million at an annual cost of $400,000, the complex now struggles to secure coverage, with current policies covering a mere $10 million at an astronomical $900,000 annual premium.

The consequences have been brutal for residents. Condo values have plummeted by nearly 30%, with units now selling for significantly less than their pre-pandemic prices. A two-bedroom unit that once sold for $640,000 in 2019 now fetches just $498,000. Most devastating is that Fannie Mae and Freddie Mac have blacklisted the property, meaning most banks won’t issue mortgages for these units.

This isn’t just a Parkwoods problem. Across Oakland, condo values have dropped 11% year-over-year, with the median two-bedroom selling for $510,000. In contrast, San Francisco condos have seen a 3.1% price increase, highlighting the uneven impact of the insurance crisis.

The root cause stems from California’s increasing wildfire risk. The Oakland Hills were site of the devastating 1991 firestorm that destroyed over 3,000 homes, and insurers remain traumatized. Despite Parkwoods implementing fire-resistant materials, installing fire-proof roofs, and even using goats for vegetation management, insurance companies remain unconvinced.

California is attempting to address the crisis. The state’s Department of Insurance has approved $1 billion in additional funding for the FAIR Plan and is designating “wildfire-distressed” areas where policy cancellations would be prevented. Small signs of progress exist, with some insurers like Liberty Mutual and Safeco beginning to offer new policies.

For Parkwoods residents like real estate agent Ina Daniliuk, the future remains uncertain. “Right now, you can sell at a loss or try to rent it out,” she says. “Either way, pick your poison”.