California was recently hit by horrific wildfires in both the north and south.
The Camp Fire in Northern California took more than two weeks to fully contain and proved to be the state’s deadliest fire ever. At least 85 people were killed in the city of Paradise. Almost 19,000 buildings – primarily homes – were destroyed.
In Southern California, the Woolsey fire claimed three lives and caused about 250,000 people to evacuate their homes. Ultimately, over 1,600 buildings – again, mostly homes – were destroyed in the fire.
The loss of life in these two fires is devastating. The loss of property is far less important, but unfortunately the property losses and the damage to the land in both of these areas will have long lasting repercussions.
Many of the homes destroyed in the Woolsey fire belonged to residents of Malibu. This exceptionally affluent area is populated with multi-million-dollar homes, which means that the loss in property value for the Southern California fire could easily total over a billion dollars. If these homeowners choose to rebuild, they will likely be looking at lower property values. Likewise, those who were fortunate enough not to lose their homes in the area have seen a substantial dip in their home values which may not bounce back for years to come.
In Northern California, the city of Paradise was all but completely destroyed. The town was primarily populated by retirees, so it seems unlikely that many people will choose to rebuild here. It’s quite possible that Paradise is simply gone.
The state and local governments will have their work cut out for them over the next several years as both encourage people affected by the fires to rebuild. Incoming governor Gavin Newsom declared a state of emergency which puts price-gouging bans into effect. This means that landlords in the surrounding areas will not be allowed to unfairly drive up rent prices for the foreseeable future as dislocated homeowners begin the process of rebuilding. House flipping investing was minimal in both affected areas, and that is likely to remain the case.
What does all of this mean for the overall California housing economy? It isn’t yet entirely clear, but it seems likely that property values outside of the affected areas should not be impacted either positively or negatively as a result of the fires. Wildfires are far from an anomaly in California, and it is unlikely that these fires will keep anyone from moving to the state. Despite other major fires over the last few years in California, markets like Fresno continue to reap success for house flippers.
To further discuss the impact of the California wildfires or to learn about our current residential rehab loans, please give our office a call any time.