For agents in Southern California, the Santa Ana winds have been blowing more than just area around the state. The winds have fanned the flames of wildfires, impacting every aspect of life for many in the Golden State.
At the start of the week, 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.
This comes just two months after the deadliest fires in state history a few hundred miles to the north in California wine country in Sonoma and Napa counties.
According to real estate data firm CoreLogic, more than 86,000 homes in Ventura and Los Angeles counties are at risk of damage from this latest round of fires, That could cost $27.7 billion to rebuild.
Chief Economist Danielle Hale of REALTOR.com® said the tragedy is compounded in an already tight market that could get worse.
“It could exacerbate an already challenging market for buyers. People will probably look more toward apartments.”
In all of California, nearly 2,045,000 homes are deemed at high or extreme risk from wildfires, according to the 2017 Verisk Wildfire Risk Analysis.
Rick Laws, regional vice president of Sonoma County for Pacific Union, noted that undamaged homes are now receiving multiple offers and going as high as $100,000 to $200,000 above asking. And many buyers in the wealthy area, whose high-end homes were damaged in the flames, have the means to pay all cash.
“The majority of people here are saying, ‘This is my home, this is my neighborhood, this is my community. Locals say ‘We’re going to rebuild and we’re going to make our community and our homes nicer than they were.’”
Generally, most people after a disaster are risk-averse, and yet most will rebuild. 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.
And even those unaffected by the fire may not be fully safe—they need to be on guard against landslides, Anderson says. Many of the trees and plants incinerated in the blaze were anchoring the land on hillsides. Without those stabilizing roots, land could be more vulnerable during a big rainstorm. Patrick Carlisle, chief market analyst at the Paragon Real Estate Group in San Francisco, said natural disasters can impact people coming to the state, at least in the short-term.
“Natural disasters on this scale can put a thumb on the scale psychologically against people relocating to California. However, unless the fires continue, people’s memories are relatively short.”