Impact on California Real Estate after the Wildfires
Firefighters continue to battle the 22 large wildfires that continue to burn through seven counties in California, including the famed wine-producing areas of Napa and Sonoma. Reports say about 3,500 homes and buildings have been incinerated by the blazes, which have ravaged about 170,000 acres, mostly in Northern California and the causes of the fires have not yet been established.
Long after the flames are extinguished the region will continue to suffer. The disaster is expected to destroy the housing markets in the area.
When the smoke starts to clear all factors will need to be taken into account as displaced homeowners decide whether they want to return and rebuild or leave the area for good.
It’s likely to take up to a decade to rebuild the homes, businesses, and essential services such as schools residents will need should they choose to return.
More than 172,000 homes are now at risk of going up in flames in the Napa and Santa Rosa metropolitan areas, which are usually not prone to wildfires, according to an analysis from CoreLogic. It will cost an estimated $65 billion or more to rebuild them.
With the median home price in the area nearing $900,000 before the fires, the area is taking a huge hit. There are reports of neighborhoods being burnt out, stating that many streets look like “charred-to-the-ground moonscape.”
It’s not only someone’s home that is lost in a situation like this, but it’s also an entire community. The fires burn the churches, the schools, stores, and restaurants.
With homes in this price range, many homeowners worry that even with insurance premiums may not get enough money to rebuild their entire homes to what they were before. It’s unfortunate in a situation like this that the price of reconstruction will undoubtedly skyrocket as a result of the high demand for construction workers.
There was a housing crisis before the fire with a vacancy rate of about 1%, now with the loss of approximately 3,500 homes, there literally is no place for people to stay.
And for homeowners who want to sell their home, they should expect to take a loss of 10% to 35%. No one wants to live near burnt-out houses or with fewer services and businesses nearby.
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