Redfin reports price growth slows in California towns hit by wildfires
However, house prices continue to rise 21% in fire-ravaged areas, compared to 33% growth in areas outside fire zones.
Posted: October 6, 2021 at 4:00 a.m. CDT|Update: 54 minutes ago
SEATTLE, October 6, 2021 / PRNewswire / – (NASDAQ: RDFN) – In the three years since major fires, home prices have risen by 21% on average in directly affected areas, according to a new report by Redfin (redfin.com), technology-based real estate brokerage. This compares to the 33% growth just outside the fire zones.
In areas within fire perimeters, home purchases declined an average of 38% in the three years following the fires. In part, that’s because when a community’s homes burn down, there are fewer properties available for sale, Redfin’s chief economist said. Daryl Nice weather. By comparison, purchases fell on average only 3% in the areas surrounding the fires. Purchases of homes inside fire perimeters suffered the most in the first year after the fires, falling 43%. By year three, that drop had fallen to 29%, as more houses were rebuilt and memories of the fires grew farther and farther away.
“Like most of the United States, California faces a severe housing shortage. This means that there are often intense bidding wars for homes for sale, even those located in fire prone areas, which contributes to the price hike, ”Fairweather said. “The forest fires themselves also make housing more expensive. After a city burns down, builders come in and build new homes, which are usually more expensive. And homeowners who stay frequently invest in making their homes more fireproof, which increases the value of the property. “
Cash purchases jump 17% in areas affected by wildfires as investors and builders rush, compared to drop 5% outside fire zones
In areas directly affected by the fires analyzed by Redfin, there was an average 17% increase in all-cash home purchases in the three years following the fires. In comparison, purchases of homes paid for in cash decreased by 5% in areas just outside fire perimeters.
An increase in home and land purchases by investors and home builders – who often pay in cash – is likely the driving force, said Christophe Anderson, a Redfin real estate agent in Napa, california, which was affected by the Tubbs fire in 2017.
“In the Napa Valley, the builders show up just after the fires. Communities want to rebuild, so local authorities tend to speed up permits and design reviews, and push fire-affected properties to the forefront, ”Anderson said. “They build houses four to six months after the fires, when normally it can take a year and a half for a builder to put a shovel in the ground. “
In the areas analyzed by Redfin that were directly affected by the fires, there was an average increase of 595% in the number of homes built in the three years following the fires. This compares to a 6% decrease in areas outside the fire perimeter. The surge in construction activity after the wildfires is also contributing to the rise in house prices.
Builders wouldn’t rebuild homes in high-risk areas if they weren’t sure people would move in, and research shows they’re right. According to an August Redfin report, more people are entering than leaving areas at high risk of forest fires and other natural disasters linked to climate change.
Clawing back lost tax revenue is another incentive that pushes communities to rebuild quickly after wildfires, Fairweather said. In the areas analyzed by Redfin that were directly impacted by the fires, property tax revenues fell by 6% on average over the three years following the fires. In comparison, there was a 12% increase in property tax revenues in places not directly within reach of the fires.
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Redfin (www.redfin.com) is a technology-driven real estate company. We help people find housing through brokerage, Instant Home Buyers (iBuying), rentals, loans, title insurance and renovations. We sell houses for more money and charge half the cost. We also manage the first real estate brokerage site in the country. Our homebuying clients see homes with on-demand tours first, and our loan and title services help them close quickly. Customers selling a home can receive an instant cash offer from Redfin or have our home improvement team fix their home to sell it for the best price. Our rental business enables millions of people across the country to find apartments and houses for rent. Since our launch in 2006, we have saved more than $ 1 billion in committee. We serve over 100 markets across the United States and Canada and employs over 6,000 people.
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