Impact of fires ease within 1-2 years
The immediate impact of wildfires will clearly have an impact on buyers considering areas prone to blazes but not for long.
That’s the finding of a study by the University of Nevada, Las Vegas, which found that following a blaze, home prices in risky areas fall relative to low-risk areas but rebound within one to two years.
The study found that buyers’ desire for the appealing views and dense vegetation of the mountainous areas that are wildfire-prone, means that even the negative media coverage of fires does not significantly weaken demand.
But, while that is good news for homeowners and real estate agents in those areas, the study’s authors say the lack of fear among buyers exacerbates the risk.
"To the extent that homeowners value the environmental amenities in these high-risk areas," UNLV research economist Shawn McCoy said. “If the market participants systematically underestimate the likelihood of a fire, we may observe inefficiently increased rates of housing development in forested areas, as well as a potential decrease in the willingness among existing homeowners to take the steps needed to prevent fire from impacting their homes."
He added that this situation is likely to play out in California where, despite the recent devastating fire, the market is expected to recover and construction in risky areas will continue.
"This is a problem: A lot of recent work shows that wildfires are not just a result of changes in global climates, but also rapid housing development into forested lands," he warned.
