In the unfortunate event of a community being reduced to ashes, the question arises: what takes its place? The answer, all too often, is a process known as gentrification.
Following catastrophes like the Marshall Fire in Colorado, communities often face similar predicaments, exacerbating existing disparities. When these ravaged areas begin to rebuild, homes tend to expand in size and luxury, according to Deserai Anderson Crow, a University of Colorado Denver professor who has studied crises such as the 2021 fire, the Covid-19 pandemic, and the 2013 Boulder County floods.
This transformation not only alters the characteristics of the area but also influences its housing affordability. The proliferation of upscale dwellings in a neighborhood raises the value, property taxes, and insurance costs for surrounding homes, even if those aren't upgraded.
Grass fires in the high desert foothills of Boulder County aren't uncommon, but on December 30, 2021, the conditions proved fiercer than usual. Hurricane-force winds fueled grass fires into a deadly and destructive "suburban firestorm," consuming over 1,000 buildings, including the home of Allison Bequette, a former public school teacher and retired pottery studio manager, who had lived in her Louisville property for nearly 30 years.
The fire caused approximately $2 billion in damages, making it the costliest wildfire in Colorado's history. Three years later, hundreds of those destroyed homes have been rebuilt, some even larger than before. On Bequette's former site now stands a six-bedroom, five-bathroom, 4,123-square-foot home, which sold for $1.45 million earlier this year, according to Boulder County property records.
The soaring housing costs in Colorado, especially around Boulder, are longstanding, with the urban center being decorated with numerous "best of" honors. Prior to recently, the city had imposed anti-growth restrictions that drove home affordability through the roof. Residents and commuters spilled over into neighboring towns, like the disaster-affected Louisville and Superior, which also saw escalating home prices due to their rising desirability.
Bequette, like many longtime residents, could not or did not choose to return and rebuild. Based on a Colorado Division of Insurance study, only 8% of affected homeowners had full insurance coverage. For those who sold their properties, the new owners constructed significantly larger homes that sold for over $1.4 million. Though Homebound Technologies, the buyer of these properties, did not respond to requests for comment, this trend continues to change the character of the area.
These drastic changes bring about increasing disparities and fuel the NIMBY (not in my backyard) sentiment when it comes to affordable housing in these communities. Furthermore, when an area suffers a catastrophic loss of housing stock, it triggers economic pressure on neighboring communities to absorb the displaced population, leading to subsequent rent and housing cost increases.
This situation is not exclusive to Colorado; it's a nationwide concern. The US is currently grappling with increasing housing affordability issues, with the pandemic and subsequent inflation worsening the problem. The primary cause is a supply and demand deficit, exacerbated after the 2008 financial crisis.
Reconstructing areas after a disaster can deepen existing disparities as the supply deficit continues. For instance, disaster recovery played an important role in the formation of Homebound, a company specializing in helping affected homeowners rebuild quickly by cutting through red tape, after the 2017 Tubbs Fire in California. However, it has also expanded into buying and reselling properties in several states, further increasing housing costs in these regions.
As highlighted by the Marshall Fire and other disasters, catastrophes can lead to quick and profound changes in the character of affected areas. This price escalation can be both a reflection of existing market demands and the immediate impacts of disasters, emphasizing the need for proactive measures to maintain affordability and social equality in disaster-prone areas.
Enrichment Data:
- According to a NOAA study, homes in flood-prone areas generally sell at a discount but come with high insurance costs, which buyers often underestimate over the lifetime of the property [1].
- Regional governments may allocate resources and funds to improve infrastructure, including better flood control measures and stormwater management systems, to reduce future risks and improve the overall value of properties [1].
- With more frequent and severe weather events, there is a heightened demand for sustainable and environmentally-friendly building materials, which can improve the resilience and long-term value of properties [1].
- Limited supply in certain urban areas, like coastal cities, can push prices up to stratospheric levels, as flood-damaged properties undergo costly repairs and rebuilding efforts [4].
- By investing in disaster recovery plans and programs, cities can help ensure that essential services, such as utilities and transportation, are restored swiftly and effectively [1].
- Developing community land trusts, which enable the long-term affordability of properties, or loosening rental regulations, can help maintain housing affordability in disaster-prone areas [2].
- Implementing proactive measures to prepare for and respond to disasters, such as conducting regular vulnerability assessments, protecting critical infrastructure, and ensuring adequate evacuation plans, can serve to reduce long-term damages and costs [2].
[1] Source: National Oceanic and Atmospheric Administration (NOAA)[2] Source: Disaster Risk Reduction Knowledge Portal[3] Source: National Bureau of Economic Research[4] Source: Housing and Urban Development (HUD)
The skyrocketing housing costs in disaster-prone areas like Colorado negatively impact the local economy, making it challenging for families and businesses to afford housing. This trend contributes to a broader issue in the United States, where the supply and demand imbalance in the housing market is causing a nationwide affordability crisis, worsened by the pandemic and subsequent inflation.
