Amidst California’s wildfire crisis, there is a gamble as to whether house prices will rise or drop in the aftermath. While it makes sense that many California homes will lose value, without exception, that is not exactly true. To make this gamble even more surprising, the rise and fall of home values can be extremely close.
Higher Property Values
Last year, over two-thousand structures, were destroyed in wildfires. This year, unfortunately, the path of destruction is rapidly creating a charred and horrific pattern. Recently, the Carr wildfire destroyed over twelve-hundred homes. This terrible blaze left over a thousand people in need of a new place to live.
Many of these people do not wish to disrupt their lives any more than the fire already has. Thus, they are going to be keen on moving to an area close to where the fire struck. The result is a demand for a nice house in the surrounding neighborhoods. Therefore, the home values close to where the fire destroyed will rise to meet that demand.
Lower Property Values
While geographically, the home value cutoff might be close, scenically, the homes are worlds apart. The people who lost their homes will be looking for new places to live, which will drive the market up. However, houses were saved from the blaze, those Phenox marvels, rising from the ashes will be decimated by plummeting values.
The reason is, while people might be happy initially, they likely will not want to stay in a salvaged house. People have many different reasons for this. First, they do not want to live in a place where they experienced such an ordeal. Often, people want to move on with their lives, salvaging anything they can and getting out.
Second, even if the house itself does not bother them, the surrounding wasteland of their former neighborhood might. The aftershock of a fire, especially following the fires that are devastating California is horrific. For months, possibly years people who remain in the area will see things that are reminded of the fire. Scents, scorched earth, and ashes where memories used to reside.
Plus, if people who lived there during the event left, it is hard to convince others to move there. Thus, the value will inevitably plunge. Unfortunately, the neighborhood will have to start fresh and it could take years to rebuild.
In summation, the devastation in California due to wildfires is terrible. Although, the home value surge, is an interesting byproduct of this devastation. Hopefully, the people affected can move on to eventually lead happy and healthy lives.
Do you need homeowners insurance? If so, Peninsula General, a Mercury partner has your covered!
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