How will North Bay fires affect real estate?
A: Our hearts go out to all those affected by the recent devastating fires. Lives are changed forever because of these catastrophic events.
The long-term prognosis is good. Fortunately, most people are insured. Insurance companies are assessing damage early, even sending preliminary checks to help with living and necessity costs. These actions ensure a strong economy in the future as construction workers, landscapers, designers, architects and other needed resources will be in short supply. Additionally, services for the influx of people who are employed will be bolstered as people again patronize restaurants, wineries and hotels.
With an already-limited supply of homes, this dearth of available housing will temporarily cause an uptick in prices as people scramble to rent or buy existing housing. Real estate is a significant driver of any robust economy and many ancillary services are affected as well, negatively in the short term with lack of supplies and very positively in the long run.
I have seen communities pull together, supporting each other with information, goods and services. The North Bay will survive this disaster through commitment and hard work, honoring the memory of those we lost and grateful for everyone who dedicated themselves to fighting the fires and keeping our communities safe as we rebuild from the ashes.
Jill Gumina, Hill & Co. Real Estate, (415) 265-1717, jkgumina@gmail.com. A: Real estate values will increase in the next few years, as existing home prices and rents go up to compensate for the loss of thousands of housing units. The upward pressure will start in the north counties and ripple across the Bay Area.
The lucky people who lost their homes and were adequately insured may decide to rebuild or they may take the insurance money, pay off their debts and move elsewhere. This could cause speculators and developers to rush in to buy empty lots.
Everything will get more expensive. The demand for skilled construction labor will go up. Finding good tradespeople has already been a challenge; now it will get worse. Building materials and all the components that go into a house will get more expensive.
The demand for homes in move-in condition will increase, while the values of “fixer-uppers” may go down. Fixers have been popular and will probably continue to be in San Francisco, but the buyers of these properties must plan for higher labor and material costs.
There will be intense pressure on city building departments to streamline the permitting process. Let’s hope that our city leaders succeed in cutting the red tape.
John Solaegui, Paragon Real Estate Group, (415) 999-0673, jsolaegui@paragon-re.com. A: The North Bay Fires will have an affect on the real estate market close to the areas that experienced the most devastation.
Natural disasters change the public perception of purchasing in high-risk neighborhoods. After seeing what a fire can do, the risks might outweigh the original appeal for some.
Studies show that although home prices drop in neighborhoods around an area that has been directly affected by a fire, it takes more than one fire to induce a permanent change.
When devastated neighborhoods rebuild, it attracts new home buyers who have not experienced what happened, such as the tragedy in San Bruno with the gas pipe explosion. The rebuilt home sale prices there have nearly doubled in value since the explosion in 2010.
The lowest fire or natural disaster risk purchases, in the Bay Area, should not experience any change in their market values. We haven’t seen any changes outside of that area.
Karin Cunningham, Berkshire Hathaway HomeServices California Realty, (650) 438-3504, karinc@bhhscalreal.com.