January 17, 2018

California in Housing Hell as Wildfires Rage On

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California in Housing Hell as Wildfires Rage On

Wildfires in Southern California showed resistance to containment efforts Sunday night, growing larger and forcing more homeowners to flee their houses. From San Diego to Los Angeles, an estimated 800 homes have been completely destroyed since the blazes—now the fifth largest in the state’s history—first started on Dec. 4. The fires have scorched 230,000 acres, prompted more than 200,000 residents to evacuate, and with more than 86,000 homes in harm’s way, total reconstruction costs are predicted to reach nearly $30 billion, according to CoreLogic.

California’s housing markets are some of the tightest in the country, so displaced renters and homeowners stand to put an even heavier strain on supply as they search for emergency shelter, “exacerbating an already challenging market for buyers,” says® Chief Economist Danielle Hale. The consequences may mirror those of California’s deadliest wildfires in the northern region of the state only two months ago.

The October blazes in Wine Country, which killed 44 people and damaged more than 21,000 homes and 2,800 businesses, caused home prices to skyrocket in Sonoma and Napa counties. At a time when the market usually slows, the median price of single-family homes increased 6.1 percent in Sonoma and 7.5 percent in Napa between September and November, according to data from real estate brokerage Pacific Union. Some undamaged homes are fetching up to $200,000 above asking price in hot bidding wars, says Rick Laws, Pacific Union’s regional vice president of Sonoma County.

Other housing experts say Southern California markets are less predictable than those to the north, so the aftermath of the latest wildfires may play out differently. Los Angeles, for example, boasts some of the priciest real estate in the nation, but the city is also larger and more diverse than Northern California markets, according to®. “Natural disasters on this scale can put a thumb on the scale psychologically against people relocating to California,” says Patrick Carlisle, chief analyst at the Paragon Real Estate Group in San Francisco. “However, unless the fires continue, people’s memories are relatively short.”

It’s never been a secret that wildfires come with the territory in California. More than 2 million homes in the state—or 15 percent of its households—are considered to be at high risk for wildfires, according to the 2017 Verisk Wildfire Risk Analysis. Wildfires in December are rare; they typically occur between late spring and mid-fall. California Gov. Jerry Brown recently issued disaster proclamations for Santa Barbara, San Diego, Los Angeles, and Ventura counties. Brown also warned residents to expect wildfire dangers to return year after year. “This is the new normal,” Brown said on Saturday. “We’re about ready to have firefighting at Christmas.”

Source: “How Will Southern California Wildfires Affect Local Real Estate?”® (Dec. 8, 2017) and “Southern California’s Thomas Fire Grows in Size Despite Efforts,” FOX News/The Associated Press (Dec. 11, 2017)