Bird, this is exactly why when I build or remodel a house, I never, ever, put a water heater inside the house. Putting it in the crawl space, or in an attached utility room, or garage makes a lot more sense.
On new houses in this area, they are actually putting water heaters in the attic. Even though they are sitting in a drip pan, I have seen many of the drip pan drains plugged with insulation. So when the water heater leaks (and they are all going to leak eventually) the drip pan will fill up, and the ceiling will get wet. With sheet rock ceilings it does not take much water before the entire ceiling has to be replaced. Saw one house where a plumbing fitting on a water heater in the attic cracked and water ran for about a week while the owners were on vacation. All the ceilings in the house, as well as the carpet and hardwood floors had to be replaced. If the builder had put the water heater in the crawl space, storage room or garage this would not have resulted in much if any damage.
O.K., I'm off my soap box now.
Bob