By Clare Trapasso
[…] Just two months after the deadliest wildfires in California’s history, hundreds of miles to the north in the wine country of Sonoma and Napa counties, the state finds itself fighting a growing and dangerous conflagration again.
As of Friday morning, six wildfires in Southern California had torched 141,000 acres, 212,000 people had been evacuated, and hundreds of buildings had been damaged and destroyed, according to the most recent information from the California Department of Forestry and Fire Protection, or Cal Fire. Several people have been injured, but no casualties have been reported so far. The state has issued its highest fire alert.
More than 86,000 homes in Ventura and Los Angeles counties are at risk of damage from this latest round of fires, according to real estate data firm CoreLogic. That could cost $27.7 billion to rebuild. And these figures don’t include the more recent blazes that broke out in San Diego to the south and Riverside County, east of L.A.
Compounding the tragedy is that these are already tight housing markets. That could get worse as more displaced renters and homeowners compete for whatever unharmed abodes are available as they rebuild […]
Lessons learned from October’s deadly fires
Usually after a major disaster, real estate prices drop. Buyers don’t want to look out their windows to see the burnt-out remains of their neighbors’ homes. Whole neighborhoods can become loud and messy construction zones as residents rebuild their beloved communities. And of course, there are always fears that another disaster could strike […]
But instead of prices going down, they actually shot up in Sonoma and Napa counties after the tragic wildfires. Median prices of single-family houses rose 6.1% in Sonoma and 7.5% in Napa from September to November, according to real estate brokerage Pacific Union. In Santa Rosa, the Sonoma County city that was devastated by the fires, median home prices have risen about 9%, says real estate agent Daphne Peterson of Keller Williams Realty. They typically fall this time of year as the market slows down ahead of the holidays. So what’s going on? Despite the destruction, this is still an incredibly desirable area to be—so much so that folks are willing to take the risk. Many of the residents who lost their homes still want to remain in the area, and will pay whatever is necessary to do so.
That’s why in these sorts of anomalous places, prices can rise as a result of the disaster, says Orell Anderson, a national real estate appraiser with Strategic Property Analytics in Laguna Beach, CA.
The fact that there weren’t enough homes on the market before the crisis only exacerbates the situation. Undamaged homes are now receiving multiple offers and going as high as $100,000 to $200,000 above asking, says Rick Laws, regional vice president of Sonoma County for Pacific Union. And many buyers in the wealthy area, whose high-end homes were damaged in the flames, have the means to pay all cash […]
How natural disasters usually affect local real estate
That kind of topsy-turvy post-disaster price appreciation may not occur in Los Angeles and the other counties affected by these latest infernos. After most natural disasters, homeowners can expect to absorb a roughly 10% discount if they put their properties on the market, says real estate appraiser Anderson. That’s because people buy neighborhoods as well as homes. So properties that were miraculously spared on burnt-out blocks are going to see the biggest discounts. (Buyers are unlikely to want daily reminders of the devastation.) Los Angeles has some of the nation’s most expensive real estate, but the city is very different from the wine counties up north—vastly larger, more diverse, and perhaps less predictable. And it isn’t yet known which areas will be damaged.
Generally, most people after a disaster are risk-averse, and yet most will rebuild, Anderson says. If a rebuilt home is later sold, it typically does so for about 5% to 10% less than the previous price. But that discount fades over time, and by five years or so, it disappears. Rebuilding is likely to cost a pretty penny after the Los Angeles fires, as the demand for construction workers and materials, already tight in the region after the last round, will soar due to the demand.
Homeowners whose homes were burnt also have to contend with insurance companies paying out only home repairs. They typically don’t compensate policy holders for the value of the land, which in some parts of California can total about half of the property’s value—if not more […]
See full article at Realtor.