For Californians — many of them inured to routine annual fires, mudslides and earthquakes — a key question is not whether to rebuild when catastrophe strikes yet again. It's whether they can afford it.
Driving the news: For many fire victims, insurance — or the government — makes it so they can rebuild on the same lot. But in some of California's most recent spate of fires, that hasn't been enough. And a lot of experts see signs that more homeowners could find it hard to rebuild as insurers reassess the risk of a new future of fire.
The big picture: Since the middle of the last century, fire has destroyed an average of 500 homes a year in California, according to the Western Ecological Research Center.
- The number of vulnerable houses keeps growing: According to a 2014 study by the Nature Conservancy, builders in the state are on track to add 645,000 homes in highly fire-prone zones by 2050.
- Judging by history, these new homeowners will view any fire as an acceptable hazard of living where they choose.
- In 11 California fires from 1970 to 2009, builders reconstructed 94% of the burned homes within 25 years, the NYT reports.
The big picture: Insurance losses from California fires last year were about $12.5 billion and this year could be about $6.8 billion, reports Don Jergler of Insurance Journal. After this season, insurers could decide to stop issuing fire insurance in high-risk zones "because they are contributing to people building where they shouldn't at all," says Dante Disparte, founder of Risk Cooperative, a DC brokerage that provides insurance to insurance companies.
- In Redding, 190 miles north of Santa Rosa, the site of the horrendous Carr fire this summer, insurance companies are already hiking rates or canceling policies altogether, said Brad Garbutt, a broker at local Vista Real Estate. "I think you're going to see the major insurance companies stop writing in this area."
- The question, Disparte tells Axios, is "should there be residential property that close to forests that are tinderboxes? Should we push back human habitation?"
Christopher Thornberg, a professor at UC Riverside and founder of Beacon Economics, said people should be free to live where they want — as long as they are covering the full cost and not relying on government services to bail them out in a catastrophe. "Raise people's insurance costs to cover the real threat and let them make the decision where they want to live," Thornberg tells Axios.
Consider two of the recent California fires:
Tubbs fire: Despite the danger, demonstrated again and again, many in California's wine country, where fire swept through in the summer of 2017, have chosen to stay.
- The Tubbs Fire destroyed about 4,658 homes near Santa Rosa, authorities say. Its footprint closely mirrored that of the 1964 Hanley Fire; parts of the area burned again in 1986 and 1996.
- Authorities moved fast to rebuild: Santa Rosa fast-tracked permits and waiving fees, the Santa Rosa Press Democrat reported.
- California’s fire-management agency has labeled some of the areas being restored “very high fire hazard severity zones.” But John Allen, CEO of APM Homes, a local home builder, tells Axios that residents understand the risks.
"A community is people. It's not buildings, it's not sewer pipes, it's not infrastructure, it's not a town hall, it's not a school. That's why they're rebuilding: They want to remain intact as a part of this community."— John Allen
Carr fire: A lower-income city than Santa Rosa, Redding has not seen nearly the same vigorous rebuilding effort since fire burned 1,079 homes in July, and produced only the second-known large fire tornado in history.
More than a thousand homes are still on the market, said Garbutt, the Vista Real Estate broker. Among the unforeseen costs of remaining are obtaining permitting, hiring contractors and meeting new fire-safety codes. Insurance policies only cover the cost of rebuilding a burned-down home; they don’t cover upgrades to meet relatively new fire ordinances, like the use of non-combustible roofs and other materials.
- "I suspect we'll have more people leaving and less people rebuilding," Garbutt tells Axios.
- "People who don't have families here may see this as an opportunity to move away, maybe to areas that are less fire-prone."
- "They don't want to be in the path of the next one, because this was really traumatic."
But, but, but: Garbutt said some people are betting that building will return to Redding. One local developer, he said, for instance, is buying up lots to hold for future construction.
Go deeper: Americans are moving into fire zones