It's more than that. This was once a fine enough place to live but improper stewardship of the earth has made it a place unreasonable to build a major city, meanwhile we're in a period where people build cities in places utterly unreasonable like phoenix. New York will occasionally get fucked by natural disasters, but what happened in LA where huge portions of the city need complete rebuilds, doesn't happen there. Wildfires have become the norm in California and it's one of the regions rapidly becoming uninsurable, alongside Florida.

The price of the houses is bad, but it's the cost to replace what was lost that insurance cares about alongside the scale of the disaster and the expected mean and variance of time to recurrence. The housing is oversized and otherwise too high value in non-market ways, lacks fire resistance, and is likely to be hit by another wildfire before insurance can recoup what they paid out.