Wednesday, October 24, 2007

SoCal Wildfires

I saw a story a few minutes ago stating that the San Diego County fires have already caused 1 billion dollars in damage.

A billion dollars just isn't what it used to be folks. We bought a downtown San Diego condo recently. It is located in a property 3 years old, comprised of two 30 story towers. The combined value of the units in these two buildings located on about an acre, maybe 2, of land is about $350,000,000. That is one property and certainly not the most expensive in downtown.

Individual property owners whose homes are burning down are certainly being harmed and will feel the bite heavily. My sympathies are with them. The overall cost of the destruction is, mercifully, tiny.

There are wild fires every year and, as far as we know, there always have been. As Roger L Simon points out on his blog, having lived in Malibu for years, the fires happen in the same places, generally, year after year and we keep rebuilding in the same places, year after year. Can the outcome really be said to be surprising?

With every hurricane in the east and wild fire in the west we hear of constantly climbing dollar value destruction as though things are getting worse, hurricanes stronger, fires wilder.

How can the losses do anything but rise? How many more houses/appartments have been built in harm's way in Southern Florida and Southern California in the last 20 years? 100's of thousands probably. That means hundreds of thousands more properties and people in harm's way. Not to mention the impact of fabulous appreciation in property values on the ultimate calculation of the losses.

It is not remarkable that losses have increased steadily, it is entirely predictable. It is completely amazing that loss of life has decreased.

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