Living in the Fire Belt
We’re finally having a wet winter, but California is a wildfire’s ideal setting.
The mediterranean climate produces wet winters, dry summers and alternating cycles of drought and rainy years. Making matters worse, a wildfire in a dry year might be followed by a comparatively wet year, which produces the bushes and thick undergrowth that produce the kindling for the next fire in the next dry year.
For the people living in California, who see increasingly strong and damaging fires year after year, one-off devastations might become the norm — a worrying trend likely exacerbated by climate change which will likely see wider swings between wet and dry years.
So when a fire devastates swathe of Santa Rosa or Ventura what happens to the real estate there? How can you take into account the “fire” risk of an area, especially when the fire risk is likely going to get worse for many suburban areas.
It’s a complex issue and one that’ll likely become more clear in the next few years but a few things are already apparent.
- Fires Clear the Slate:
Despite the initial devastation a wildfire may cause, then the smoke clears type of land-grab takes place. This phenomena is pronounced in rural areas. After the 2015 Butte Fire, local farmers quickly bought up the land and converted those former housing tracts to farmland.
2. Tax Relief
Owners can claim tax relief within 12 months of the damage occurring. The tax relief will remain in place until the property is rebuilt or restored.
3. Local Market Distortions
With thousands of homeowners displaced, local rental properties spared the effects will spike in value. Unfortunately, most of the displaced will be house-hunting in one of the most expensive real estate markets in the country.
4. Insurer Non-Renewals
While immediately after a fire, there will be risk takers who see an opportunity, if fires dramatically effect an area year after year, this will change. Insurers will steer clear of entire areas especially the homes in what is known as the wildlife/urban interface where 1M of the state’s homes are located. Even if homeowners are able to keep their coverage, many will see dramatic hikes in premiums if they live in the areas that have seen spikes in devastating fires in the past 30 years.
5. Retreat to the Cities
For seventy years urban development (largely) expanded upon the periphery, encroaching upon wilderness. In California, that meant expanding into the fire-prone Chaparral. It’s not crazy to imagine that when insurer’s refuse to build in the rural or semi-rural areas that cities will be the only places where new construction will be insured due to the wildfire threat.
Conclusion:
Limiting factors to a cities expansion used to include things like mountains, or its ability to feed itself. It might include fire-risk too. Like many things, California will be the first to find out.
