California’s Wildfires Raise Home Values
November 27, 2018
Homes being destroyed by a wildfire has become an all-too familiar story throughout all areas of California. In 2017 alone there were more than 11,000 structures in the state damaged from wildfires, according to California Department of Fire Protection (Cal Fire). Every year the state is devastated by fires burning out-of-control which impacts homeowners both in the path of the blaze as well as those in the clear.
It goes without saying that the housing market in and around a recent wildfire is a lot different than it was before the natural disaster hit. Houses that were burned or in view of burned land will obviously plummet initially but actually will see an increase in value in as little as one year. Those houses located just outside the burned area will surprisingly see an immediate increase in home value.
Supply and Demand Perspective Raise Home Value
Often times there are thousands of people left with no place to stay during and after a wildfire. This causes an immediate increase in demand for housing in and around the cities that were destroyed since most people will prefer to continue living in the local area. Housing supply in the area will be down from the loss of houses which will cause others to soar. Real estate prices will rise as much as 25 percent for those homes located just outside the burned cities.
Home values that were increased primarily because of a nearby wildfire should last for a minimum of two years before getting back to normal. An average of two years is how long it takes for a community to rebuild after a wildfire and gets the housing supply back up. It is not a coincidence that wildfires frequently occur in highly desirable living locations since most fires are unintentionally started by local residents.
Wildfires Raise Home Values
When a city is destroyed by a wildfire it introduces opportunity to rebuild and do things better. Opportunity-seekers and real estate investors will look to purchase properties at discounted rates and developers will see opportunities to put their crafts to work. After a wildfire has burned through a community it is extremely unlikely another one would strike for years to come. A lot of investors understand once all of the trees and vegetation has been burned there is no fuel left to support a wildfire in the future.
When a house gets rebuilt after a wildfire it is going to be a lot larger and more modern than it was previously. Big homes with modern amenities that are located in highly desirable locations will always do well in the real estate market. House hunters specifically look to invest in the new supply of homes located in rebuilt areas. Regardless of the risk or past history of wildfires there will always be a demand for houses located in mountain landscape areas near large cities. Overall housing values might initially drop some for the first few months after a wildfire but will quickly raise to pre-fire prices and beyond.
Homeowners negatively affected by a wildfire have the option to either surge in the housing market or purge their real estate investment. Houses that were burned or located in a burned area will present an excellent opportunity to perform home renovations with the assurance that California’s wildfires raise home values.