How does a forest fire effect nearby home values?

I hadn’t even thought of market values while watching these fires. I guess it would depend on why you don’t think the fires will get to your houses. If it’s because they’re protected, market value would go up. If they’re as vulnerable as any other home I would say it would go down. I’m not buying in a place were everything can go up in flames. I’ve seen wildfires in the Adirondacks and the power they have is so scary. It’s get out of the way and hope.

Good question. I don’t know. If the insurance companies can come up with a reason to increase rates; I’m sure they will. But if the fire has destroyed the materials that are prone to combustion, that would eliminate the risk of fire now and the rates shouldn’t change.

I was thinking it was like hurricane or flood prone areas, but it isn’t if the vegetation that can burn is gone up in flames. Hhmmm. I hadn’t thought about that. I don’t know.

According to one study published in Ecological Economics, when the burn damage is visible, property values go down. But as soon as the green returns, property values go back up. Here’s the abstract:

This study employed the hedonic price framework to examine the effects of 256 wildfires and environmental amenities on home values in northwest Montana between June 1996 and January 2007. The study revealed environmental amenities, including proximity to lakes, national forests, Glacier National Park and golf courses, have large positive effects on property values in northwest Montana. However, proximity to and view of wildfire burned areas has had large and persistent negative effects on home values. The analysis supports an argument that homebuyers may correlate proximity to and view of a wildfire burned area with increased wildfire risk. Indeed, when a burned area is not visible from a home, wildfire risk appears to be out of sight and out of mind for homebuyers. Findings from this research can be used to inform debate about efficient allocation of resources to wildfire preparedness, including public education programs, and suppression activities around the wildland–urban interface.

Any effect from fire proximity or fire damage is short lived. Real estate prices near the Oakland Hills fire of 1991 paused for six months. Same with prices near the South Lake Tahoe Wye a few years back. And prices in Los Angeles County seem to ignore wildfires all together.