Wildfires are big news. Last July in Jasper, the country watched in horror as a wildfire consumed one-third of the town’s structures, forced the evacuation of 25,000 residents, and resulted in the death of one firefighter and insurance claims of $880-million.
Now we’re watching again as fires consume huge swaths of land in Los Angeles. The final numbers from this disaster are still being counted, but as of Jan. 17, 27 are confirmed dead, 200,000 were forced to evacuate and some 12,400 structures were destroyed or damaged. At this point, there are only vague estimates of monetary damage.
The housing impact of natural disasters
In terms of housing, everyone whose homes were damaged or destroyed needs a place to live. Imagine a disaster of that scale impacting the heavily populated areas of Canada. In the midst of our existing housing crisis, how could we possibly cope with tens of thousands of people who suddenly need to be housed?
And don’t think, “It can’t happen here.” This subject impacts homeowners across the country and will only become a bigger part of Realtor practice in the years to come.
For one, the similarities between the geography of L.A. and the Lower Mainland can’t be lost on anyone. Los Angeles suffered the driest nine-month period on record prior to the start of the wildfires. B.C.’s own “heat dome” is still a recent memory for residents here.
While we don’t typically have katabatic winds like the Santa Ana, our region nonetheless experiences regular outflow winds from powerful high-pressure events in the B.C. Interior.
Climate change and the escalating risks
No, climate change alone didn’t “cause” the Jasper or L.A. fires. But environmental conditions and years of willful ignorance of preventative measures have made the impact of these fires far worse than the case a few decades ago.
And while the financial impact will be immense, confirmed by the total insurance claims, the human cost—deaths, displacement, lost memories, destroyed family 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 and particularly those of us in BC? We have wildfires—seemingly worsening every year. We have floods—in some cases catastrophic. We will have sea level rise—the slowest moving but most relentless form of climate change.
Ironically, some of the most-valued properties in B.C.—riverfront, lakeside, oceanfront, or surrounded by forest—are the ones most imperilled by climate change hazards. These properties are facing increased scrutiny from the insurance industry with rising annual premiums and refusals to renew policies in the highest-risk regions.
Without insurance, financial institutions will not grant mortgages, and only those with cash-only deals will be able to purchase. But the biggest question is this: Who would be willing to invest that much equity on a property they can’t insure?
The rising cost of insurance and affordability
Even if insurance is attainable for homes in higher-risk locations, it will be at an extremely high cost, which also impacts the property’s affordability. This insurance could also come with caveats. Will insurers provide coverage only if some amount of risk mitigation (such as flood protection levees, separation from the forest interface, and fireproof roofing/cladding materials) is undertaken?
Then there is the element of homeowner protection. Which purchasers will be willing to put their families at risk of poor air quality (wildfire smoke) or emergency evacuation due to flood or fire warnings? Inevitably, as consumer awareness of property-specific risks increases, their willingness to pay top dollar for properties previously considered “highly desirable” is likely to decline.
The role of Realtors
From a regulatory standpoint, governments will inevitably require higher disclosure requirements so that prospective home buyers are fully informed of potential climate change-induced hazards. It will be incumbent on Realtors to provide the information necessary to ensure buyers make an informed decision, fully understanding the potential risks.
While nobody is expecting Realtors to become overnight subject-matter experts, knowing which areas are subject to seasonal or overland flooding, or at highest risk from wildfires, will be important knowledge to pass on to clients.
The days of ignoring the realities because we can’t readily see the impacts of climate change are gone. You can ask the residents of Jasper and L.A. what they think.