How 2017’s fire season is impacting 2018’s housing market

Homes and other structures were destroyed in historic proportions during California’s 2017 fire season. The impact of the fires continues well into 2018, especially in Northern California where the fires destroyed thousands of homes.

How did the loss of homes impact local housing markets? Trulia reports:

In Sonoma County’s Santa Rosa, where the Tubbs fire destroyed nearly 3,000 homes — roughly 5% of its total inventory, according to the Los Angeles Times — empty lot listings have jumped 235% from last year as of March 2018. This jump indicates many of the homeowners who lost homes in the fire are choosing not to rebuild. But they’re not going far, either.

For-sale inventory in Sonoma County has dropped 14% from a year earlier as of March 2018, implying strong demand from homebuyers. Worse, inventory in nearby Napa County has fallen 22% from a year earlier.

Also dampening the search of local homebuyers who lost homes in the fire is increasing competition from outside residents.

Their main competition are residents of San Francisco and San Jose, where home prices and rents are the highest in the state. Only an hour or two away from Sonoma and Napa Counties, Bay Area homebuyers are increasingly searching farther afield from their places of work. For example, home searches in Santa Rosa originating from the Bay Area rose 8% from a year earlier, despite the area’s clearly high fire potential.

Future developments

The need for more housing in and around the Bay Area is clear. Population growth has outweighed new housing for years. Construction picked up somewhat in 2017, but in addition to the human tragedy, the fire was a major setback for housing development.

Now, residents who lost homes aren’t even sure whether they’ll be able to rebuild. Not just homes, but the entire infrastructure of neighborhoods needs to be rebuilt, which will take years and money not available to those who were underinsured or unwilling to wait.

What needs to happen is intervention from local legislators. In Sonoma and Napa Counties, governments need to incentivize the building of more multi-family homes, increasing density. This will house more residents and at lower costs. Until then, the local housing crisis in fire-damaged areas will only worsen.

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