Wildfires are making headlines. Last July in Jasper, the nation watched in shock as a wildfire destroyed one-third of the town’s buildings, forced 25,000 residents to evacuate, and led to the death of a firefighter and insurance claims totaling $880 million.
Now, we are witnessing fires engulfing vast areas of land in Los Angeles. The final toll from this disaster is still being tallied, but as of Jan. 17, 27 deaths have been confirmed, 200,000 people were evacuated, and around 12,400 structures were damaged or destroyed. The monetary damage is yet to be fully estimated.
The impact on housing due to natural disasters
In terms of housing, everyone whose homes were impacted needs a new place to live. Picture a disaster of that magnitude affecting densely populated areas in Canada. With an existing housing crisis, how would we handle the sudden need to house tens of thousands of people?
And let’s not assume, “It can’t happen here.” This issue affects homeowners nationwide and will likely play a bigger role in real estate practices in the future.
There are striking similarities in the geography between L.A. and the Lower Mainland. Los Angeles experienced its driest nine-month period on record before the wildfires began. B.C. residents still remember the recent “heat dome” experience.
Climate change and the increasing risks
While climate change is not solely responsible for the Jasper or L.A. fires, environmental conditions and neglect of preventive measures have exacerbated the impact compared to a few decades ago.
The financial consequences will be significant, as evidenced by the insurance claims, but the human toll – deaths, displacements, lost memories, and destroyed heirlooms – will likely leave the deepest scars.
The future of real estate in high-risk areas
What does this mean for real estate in Canada, especially in B.C.? With wildfires worsening each year, catastrophic floods, and rising sea levels due to climate change, certain highly valued properties in B.C. face increased risks.
Ironically, properties like riverfront, lakeside, oceanfront, or forest-surrounded homes are most vulnerable to climate change hazards. Insurers are scrutinizing these properties more, leading to higher premiums and policy non-renewals in high-risk regions.
Without insurance, mortgages won’t be granted by financial institutions, and only cash buyers can acquire these properties. The big question remains – who would risk investing in a property that can’t be insured?
The escalating insurance costs and affordability challenges
Even if insurance is available for high-risk properties, it will come at a steep price, affecting affordability. Insurers may require risk mitigation measures like flood protection levees and fireproof materials to provide coverage.
Homeowners must also consider the risks of poor air quality from wildfires or emergency evacuations due to floods or fires. As awareness of property-specific risks grows, the willingness to pay top dollar for once-desirable properties may decline.
The role of Realtors
Governments will likely mandate increased disclosure requirements for potential home buyers regarding climate change-induced hazards. Realtors must provide essential information for informed decision-making by buyers, ensuring they understand the risks involved.
Realtors don’t need to become experts overnight, but knowing about areas prone to flooding or wildfires will be crucial information to share with clients. The days of ignoring climate change impacts are over – just ask the residents of Jasper and L.A.
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