Economists know that the prices of houses tend to drop in the aftermath of a nearby wildfire. But a new paper reveals good news for those who have invested in vulnerable woodland property: Unless you can literally see the fire scar from your home, these prices rebound within a couple of years.
Shawn McCoy and Randall Walsh, economists at the University of Las Vegas and the University of Pittsburgh, respectively, unveiled these results in a recent paper, in which they analyze the effects of wildfires on the housing market in Colorado.
“When we focus on these areas that are close to the fire but can’t see it, after the fire happens, you see a one- to three-year decrease in the price, and an increase in sales rate,” Walsh says.
For houses that had a continued view of the destruction, Walsh says, the return to pre-fire prices took longer. In other words, homeowners who survive a fire soon cease worrying about the possibility of future fires — unless they’re literally confronted with a dead forest every time they look out the window.
Perhaps more significantly, their paper shows that this ruined view is not the reason for the decline in house prices. Rather, McCoy and Walsh reveal that properties lose their value because residents briefly become more attuned to the risks of fire, rather than because their homes have lost beautiful forest views.
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