Home Prices Grow at Much Slower Rate in Towns Burned by California’s Most Destructive Wildfires
October 06, 2021
In the areas within the fire perimeters, home purchases declined by an average of 38% during the three years after the blazes. That's in part because when homes in a community burn down, there are fewer properties available to sell, said Redfin Chief Economist
"Like much of the
Cash Purchases Jump 17% in Wildfire-Hit Areas as Investors and Builders Swoop In, Compared With a 5% Drop Outside Fire Zones
In areas directly impacted by the fires Redfin analyzed, there was a 17% average increase in all-cash home purchases during the three years after the fires. By comparison, home purchases paid for with cash declined 5% in areas located just outside of the fire perimeters.
An increase in home and land purchases by investors and homebuilders—who frequently pay with cash—is likely the driving force, said
In the areas Redfin analyzed that were directly impacted by fires, there was a 595% average increase in the number of homes built during the three years after the fires. That compares with a 6% decrease in the areas that fell outside of the fire perimeter. The surge in construction activity after wildfires also contributes to the increase in home prices.
Builders wouldn't be rebuilding homes in high-risk areas if they weren't confident people would move in, and research shows that they're right. More people are moving in than out of areas facing high risk from wildfires and other natural disasters tied to climate change, according to an August Redfin report.
Recovering lost tax revenue is another incentive that drives communities to rebuild quickly after wildfires, Fairweather said. In the areas Redfin analyzed that were directly impacted by fires, property-tax revenue dropped 6% on average in the three years following the fires. By comparison, there was a 12% increase in property-tax revenue in places that weren't directly within the fires' reach.
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