Natural disasters provide opportunity to build even bigger homes

In the spirit of “never let a good crisis go to waste,” homeowners in five areas that experienced natural disasters in recent years ended up with larger homes:

To estimate the mean change in real estate, Lazarus and his team gathered satellite data, from sources like Google Earth, of five hurricane-prone places: Mantoloking, New Jersey; Hatteras and Frisco, North Carolina; Santa Rosa Island, Florida; Dauphin Island, Alabama; and Bolivar, Texas. They looked at images taken before the most recent hurricane and compared them to satellite data gathered post-recovery.

Even with conservative study inclusion criteria (any structure that experienced a 15 percent or smaller change in size was excluded, Lazarus says, because with “satellite imagery, there’s tilt, the sun can glare in places, and you have to be careful with what you’re digitizing”), the results were striking. The study found that rebuilds were between 19 and 50 percent larger than the original structure. New construction increased in mean size between 14 percent and 55 percent compared to the buildings that stood before a given storm…

“This is where the moral hazard comes in: the risk of some choice you make is not entirely yours, it’s distributed to other people,” he says. In the United States, for example, taxpayers fund the National Flood Insurance Program, a financially-beleaguered federal entity that insures many of these enormous beach constructions. As a result, every taxpayer is inadvertently “supporting development in risky places,” he says.

There’s also concern that such disasters may be displacing poor and middle-class homeowners, allowing developers to swoop in after a catastrophe and build a wealthy renter or buyer’s dream McMansion from the ashes. In a blog post accompanying the study, Lazarus cited several such events, documented by newspapers around the country. “The one that really continues to hold my attention is the New York Times piece on the Jersey shore,” he says, citing a story about developers who were able to buy bigger lots at depressed prices, permanently changing the community.

I can see why this seems odd. An argument can be made that homes constructed in disaster-prone areas should be more modest. Perhaps homes should not be rebuilt in these locations at all. Building even bigger homes may appear to be throwing caution to the wind.

At the same time, the trend in the United States for a long time has been toward bigger and bigger homes. Regardless of the reason a home is destroyed, would a majority of Americans respond by building a larger home? And this might be especially true in this areas near the beach where homes and land can have a high value (even if there is a threat of disasters).

If a bigger home equals a better home for many Americans, it will be difficult to argue otherwise, regardless of the situation.

Fire-resistant homes, private firefighters, public goods, and inequality

Perhaps designing a home that can hold off wildfires is not the best way to go. Instead, just hire your own team of firefighters:

As multiple devastating wildfires raged across California, a private firefighting crew reportedly helped save Kanye West and Kim Kardashian’s home in Calabasas, TMZ reported this week. The successful defense of the $50 million mansion is the most prominent example of a trend that’s begun to receive national attention: for-hire firefighters protecting homes, usually on the payroll of an insurance company with a lot at risk.

The prominence of celebrities in the story may attract controversy but the use of private firefighters is part of a larger trend:

The National Wildfire Suppression Association represents 250 private wildfire-fighting companies, who provide on-demand services to federal, state, and local governments. Budget cuts have forced privatization onto the Forest Service, as the NWSA itself explains. “The emergence of private contract resources—national and regional 20-person firefighting crews, engines, dozers, tenders and other specialized equipment, and support services such as caterers and shower/handwashing units—gives agencies the flexibility they need to increase or decrease support with the most cost effective solution,” the NWSA media backgrounder says.

While Americans generally think certain public goods should be available to all or many (though this is notably missing in certain areas, such as a right to housing), those with wealth often can access different options or better versions of what the public can use. A historian puts it this way:

“Are the present examples (Kanye West et al.) the thin end of a wedge that will lead to the wealthy buying better services in all these realms: education, policing, healthcare, firefighting?” Bailey wondered. “Or are we already a long way down this path?”

I wonder if Americans feel differently about natural disasters, sometimes termed “acts of God.” It is hard for anyone to completely prepare or defend against major disasters including flooding, hurricanes, tornadoes, earthquakes, and fires. The wealthy can rebuild and recover more easily but only so much can be done in these situations. This differs from more typical goods or public services people can access where we have much less conversation about buying into higher levels of service or quality.

Building celebrity mansions that can stave off wildfires

The Woolsey Fire in southern California has claimed the large homes of numerous celebrities:

Early Monday morning, Cyrus tweeted that her Malibu home — a $2.5 million mansion she purchased with her fiance, Liam Hemsworth, in 2016 — had been destroyed. The Woolsey Fire, which has been burning swaths of Los Angeles and Ventura counties in Southern California since Thursday, has forced evacuations and threatened thousands of homes from Thousand Oaks to Malibu…

Butler focused the camera on the charred frame of his former house, surrounded by ash and the blackened shell of a truck…

In a post on his website, Young stated that he had just lost “another” house to a California fire, referring to the Malibu home he shared with Daryl Hannah…

As The Post’s Sonia Rao reported, the historic Paramount Ranch production set in Agoura Hills burned on Friday, while wildfire threatened the nearby homes of a slew of celebrities, including Guillermo del Toro, Alyssa Milano, Lady Gaga, Will Smith, Kim Kardashian-West and Kanye West, James Woods, Orlando Bloom, Melissa Etheridge, Rainn Wilson, Cher and Pink.

Given the amount of money wealthy people put into their homes, what features could help a home avoid wildfires? A few options:

  1. An exterior sprinkler/hose system to help keep the home wet and not burst into flames.
  2. A protective shell that could arise around the exterior of the home.
  3. Construction out of certain materials that would be more fire-resistant.
  4. Building homes within communities that have permanent fire breaks around them or other devices to help slow fires before they arrive at individual homes.

None of these options would be cheap but there could be an opportunity here. And if these options could be had at a reasonable price, perhaps they could make their way to the general market.

(Side note: see an earlier related post about creating a McMansion that could withstand other natural disasters.)

Foreclosure crisis to come in Puerto Rico

Even as the foreclosure crisis seems to have passed in recent years on the mainland, Puerto Rico is set to see foreclosures galore in the coming months:

Now Puerto Rico is bracing for another blow: a housing meltdown that could far surpass the worst of the foreclosure crisis that devastated Phoenix, Las Vegas, Southern California and South Florida in the past decade. If the current numbers hold, Puerto Rico is headed for a foreclosure epidemic that could rival what happened in Detroit, where abandoned homes became almost as plentiful as occupied ones.

About one-third of the island’s 425,000 homeowners are behind on their mortgage payments to banks and Wall Street firms that previously bought up distressed mortgages. Tens of thousands have not made payments for months. Some 90,000 borrowers became delinquent as a consequence of Hurricane Maria, according to Black Knight Inc., a data firm formerly known as Black Knight Financial Services.

Puerto Rico’s 35 percent foreclosure and delinquency rate is more than double the 14.4 percent national rate during the depths of the housing implosion in January 2010. And there is no prospect of the problem’s solving itself or quickly.

Even before the storm, Puerto Rico was mired in a severe housing slump. Home prices over the past decade have fallen by 25 percent, and lenders have foreclosed or filed to foreclose on 60,000 home loans, according to the Puerto Rico state court system. Last year, there were 7,682 court-ordered foreclosures — a roughly 33 percent increase from 2007. Some 13,000 foreclosure cases are pending, Black Knight estimates.

Without an easy fix and knowing that this is a longer-term issue that may not be solved with mild economic improvement, it will be interesting to see what happens. Some questions this raises:

  1. Will Puerto Rico and the involved parties (residents, mortgage lenders, local governments) be treated the same as mainland parties during the late-2000s housing slump?
  2. What lessons learned from the late 2000s will be applied here and can those lessons demonstrably help lessen the impact over time?
  3. Will institutional buyers of distressed properties see Puerto Rico as a potential gold mine? If so, how does this then affect Puerto Rico in the next few decades?
  4. What is a long-term plan to help boost the economic prospects of the island?

There are many ways this could play out but one would hope that since we have seen some of this before, the effects do not have to be so bad.

Could you build a hurricane, tornado, flooding, blizzard resistant McMansion?

With the number of single-family homes damaged by Hurricane Harvey in Texas, could you design a McMansion that could stand up to natural disasters? Here are a few factors that might affect whether this is possible:

  1. One of the advantages of McMansions for builders is that they are often constructed on a mass scale. Any changes to construction could slow down the process.
  2. Related to #1, an increase in the materials needed or a slow down in the process would likely lead to an increased price. Compared to true mansions, McMansions are aimed at a broader segment of the housing market.
  3. Different disasters likely require different approaches. If the problem is tornados, say in Tornado Alley, you are trying to protect against winds whereas if the home is constructed in a flood plain or on a coast, the home could be built on stilts or piers to allow floodwaters to pass underneath.
  4. Many McMansions are constructed in suburban areas. No matter what you do to each house, it could be very difficult to protect against everything. For example, flooding is less an issue of each home being poorly constructed but rather a problem connected to land development on a broader scale.

Many McMansion builders or owners would not have to worry too much about major disasters. But imagine that someone develops “the Resilient McMansion.” Could this be worth pursuing in certain areas?

Why Canadian communities may not have an incentive to avoid flood plains

If the costs for rebuilding in flood plains is covered by the provincial and national governments, why would communities limit building on those flood plains?

As the battle to protect homes from flooding continues across the country, questions are being asked about whether it’s time to reconsider regulations that allow developers to build on flood plains.

Jason Thistlethwaite, an assistant professor at the University of Waterloo’s faculty of environment, says the problem is that municipalities set zoning regulations and collect property tax revenue but do not pay for rebuilding costs after natural disasters.

“The municipality really doesn’t have an incentive to go in and use land-use planning and building codes and communications strategies to tell people that they are at risk of flooding, particularly given that most of the revenue comes from development, it comes from property taxes.” Thistlethwaite said. “So they face a real conflict of interest…

Last February, the Parliamentary Budget Office released a report estimating that over the next five years the federal government will dole out an estimated $902 million a year in disaster-related relief to provinces and territories.

I could see at least two good arguments against building in flood plains:

  1. The financial costs in the long run. Of course, the suggestion here is that local communities don’t bear the costs. But, even if they are paid at higher levels, the costs are going to get passed down eventually. Additionally, communities might benefit from property taxes but the reconstruction times and costs also would limit the property taxes they can collect.
  2. Environmental reasons: it can’t be good to have buildings and other debris from the built environment consistently washed into waterways. Limiting development on floodplains also allows for rivers and other waterways to go through natural cycles.

Either could be a good enough reason. However, as noted above, it is very difficult for communities to pass up on allowing development on desirable properties. There are similar situations in the United States.

One of the better options I’ve seen in some suburbs is to convert these flood areas to parks. This accomplishes two purposes: (1) when flooding does occur, the damage is reduced since it affects fewer buildings and (2) having a park nearby can enhance property values and the quality of life.

Successful: reversing highway lanes to evacuate people ahead of a hurricane

As Hurricane Matthew approached, officials used all the lanes of highways:

Across swaths of Florida, South Carolina, Georgia, and North Carolina, half the highway lanes have reversed. Traffic engineers call this “contraflow,” the volte-face of normal traffic. Now, on both sides of these roads, vehicles only run one way—away from Hurricane Matthew

To select the exit routes months or even years before hurricane season, transportation planners turn to flood maps and atmospheric modeling. They predict hazards: wind, storm surge, freshwater flooding. They rely on traffic counts and experience to predict if and when residents will decide to finally leave their homes, and how…

The planners build computer simulations of their predictions, and tinker with the variables—down to specific intersections’ traffic signals—to speed up the process. With a few days notice, some regions choose to evacuate in waves, asking those living at low elevations to depart hours or even days before inland residents.

Rural regions often direct their residents toward one major highway, physically blocking off smaller roads. This undoubtedly results in jams, but some officials would rather have their populations—with their attendant gas, medical, and food needs—bunched together than spread throughout the hinterlands. Metropolitan areas are more likely to shut down an entire stretch of interstate, forcing cars onto side roads until they converge on bumper-to-bumper congestion miles from a flood zone.

It makes sense to use all available lanes going away from the hurricane, especially toward the end when few people would want to go the other direction. I would still be intrigued to see how many police such an effort requires and how drivers navigate on and off ramps going the opposite direction than normal. Even with all the lanes open one way, I imagine the traffic is not moving too fast.

If I remember correctly, reversing the lanes of highways was also on the table during the Cold War to quickly evacuate a major city. You can read a current-day guide to preparing for a nuclear blast here – there is no mention of highways. However, it does suggest more scenarios when people might be asked to evacuate:

Evacuations are more common than many people realize. Fires and floods cause evacuations most frequently across the U.S. and almost every year, people along coastlines evacuate as hurricanes approach. In addition, hundreds of times a year, transportation and industrial accidents release harmful substances, forcing many people to leave their homes.

While people may not think about evacuations much, I don’t think the highway lane reversals are common at all.