Pacific Northwest Research Station

Wildfires and home prices: are they related?

USDA Forest Service
Pacific Northwest Research Station

Media assistance

Sherri Richardson Dodge, (503) 808-2137, srichardsondodge@fs.fed.us

PORTLAND, Ore. August 29, 2005. Do wildfires influence the housing market? Is it a consideration when people buy or build?

Geoffrey Donovan, an economist at the USDA Forest Service’s Pacific Northwest Research Station in Portland, Ore., and his colleagues collaborated with the Colorado Springs Fire Department in Colorado to answer these questions.

The fire department developed a computer model to rate the wildfire risk of 35,000 parcels in the city’s wildland-urban interface. Each parcel was given a fire risk rating: low, medium, high, very high, or extreme. The information was posted in 2002 on a fire department Web site accessible to homeowners who wanted to determine the risk rating of their home and learn how to reduce fire risk.

“We found that before the wildfire risk ratings were made available,” says Donovan, “houses at higher risk from wildfire had higher sales prices than similar houses with a lower wildfire risk. This result seemed counterintuitive, until we considered that factors that increase a home’s wildfire risk, such as being located on a ridge, can also have desirable effects such as better views.

“However,” he continues, “after the wildfire risk ratings were released, we no longer observed a relationship between wildfire risk and housing prices. This was largely due to a change in tastes for flammable building materials.

“For example, before wildfire risk ratings were released, a wood roof added nearly $12,000 to the home price, whereas after wildfire risk ratings were made available, houses with wood roofs sold for $5,000 less than houses with less flammable roofs. It appears that the Fire Department’s program successfully changed homeowner’s attitudes concerning wildfire risk.”

Wildfires continue to destroy homes as more and more people live closer to wildland areas. Nationally, wildfires destroyed an average of 2,500 homes in 2002-2003; up from an average of 900 burned between 1985 and 1994.

Cooperators in the study with Donovan are Captain Bill Mills and his team at the Colorado Springs Fire Department; Patricia Champ, Rocky Mountain Research Station/USDA Forest Service; and David Butry, Southern Research Station/USDA Forest Service.

For more information about the Colorado survey visit http://csfd.springsgov.com/, and to learn more about the USDA Forest Service Research and Development visit http://www.fs.fed.us/research/.