Value of burned Texas lands may have declined by as much as 50%-60%, says real estate appraisal firm; timberland property could take a years to recover
September 19, 2011
– The Texas acreage blackened by wildfires may suffer reductions in the value of the property by as much as 50 to 60 percent and a full recovery could take years, according to Lewis Realty Advisors, a Texas-based real estate appraisal and consulting firm.
Extreme drought conditions across Texas have led to scores of wildfires that have burned over a million acres of land and over 1,500 residences, the Texas Forest Service reports.
“The wildfires have destroyed the trees and the intrinsic value of large swaths of Texas landscape,” said Kim Kobriger, managing partner of Lewis Realty Advisors. “Pasture land that supported livestock will bounce back quickly after significant rainfall. But timberland and property used for suburban residences may not recover for a decade.”
Property studded with pine trees can be restored within 10 years, but land with slower growing oaks may not be fully replenished for over 20 years, Kobriger said.
Over the years, Lewis Realty appraised a significant number of ranches in the Texas, including the 4,500-acre Steiner Ranch in Travis County, which was transformed into a master-planned community. Dozens of homes in Steiner Ranch burned recently.
The full extent of the loss of value to Texas’ lands will not be determined until some of the burned properties are sold to establish current market value. Unlike residential structures, land is not generally covered by insurance.
The reduced value of the burned property could pose a problem for financial institutions that have funded land developments. With the reduced value of the burned land, smaller banks may need to foreclose on the land to maintain capital requirements.
“Smaller banks may not be able to sustain the loss of the burned land on their books and the landowners may not be given loan extensions,” Kobriger said. “Larger institutions are likely to have the flexibility to extend the loans.”
Lewis Realty Advisors, a Houston-based firm, has appraised ranches, farms, timberland, residential developments, commercial property, government buildings and a number of Texas land conservancies with endangered species habitats. Lewis Realty Advisors also provides consulting services for private estates for tax and estate planning, bankruptcy and mediation. www.LewisRealty.com
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