FIRE! Burning in Northern CA - 884+ Homes Burned

[Karen Margrave]

My hometown of Redding CA is burning. So far 884 homes completely destroyed, and 170+ damaged. 30,000 people have been evacuated (including some of my family) an 110,000 acres burned. The good news is that the community, cities and even other states are sending donations to help, firefighters, and thankfully the new supertanker - a 747 equipped to drop retardant on the fires. 

Homes destroyed range from mobile homes to high end luxury homes. 

With an already tight real estate market, people have no place to go. Many will be looking for rental housing, of which there is slim to none. For those of you with experience rebuilding homes, investing in fire zones, living in an area that's been affected by such a fire, losing a home or having it damaged, please weigh in.

In southern CA we bought a parcel where the house had burned down. The upside is you get credit back for fees. However; in a newly burned area, I'm not quite sure the process that is required before homes can be rebuilt. It seems that all of the lines for sewer, water, utilities, etc. would need to be inspected, water quality tested, etc. How long does it take for insurance companies to process claims, etc.? 

The fire hasn't yet been contained, but the displaced are naturally beginning to look for housing and the options. Being from the area, we had already planned to go back there, but the fire has increased our motivation. I own property there, and have family. My daughter is a Broker, and I already have my license with her, plus I am a licensed general. The reason for many of these questions is to try an assist those in the middle of the chaos of this find direction. 

I was just curious for those of you with any experience in such a situation, if you could please share your experiences. 

[Brian Burke]

@Karen Margrave I've probably flipped as many houses in Redding as I have anywhere--owned rentals there (and still do) and have a couple of flips there in various phases of the process right now.  And I live in Santa Rosa where we lost 5,000 homes last October in the Tubbs fire.  So needless to say the last few days have been interesting.

I'm fortunate, I didn't have any fire loss in the Tubbs fire nor in the Carr fire.  My longtime Redding employee was lucky too.  Her house, the house on either side, and one across the street are the only ones still standing in her entire neighborhood.  So very, very sad.

In Santa Rosa the first certificate of occupancy was issued on a rebuild about six weeks ago, so we're talking 7-8 months for the first completed rebuild.  As of now there are dozens of homes under construction with many nearing completion and I suspect there will be a lot more soon as the pace ramps up (yes, dozens out of thousands that burned).

The process is not easy though.  First is the lot clearing process, soils testing, etc to get the lot certified.  The city will probably test the water while that is all going on.  In Santa Rosa, we have one area of Fountaingrove where the city detected Benzene in the water--they think it was from the heat "melting" the plastic in the distribution system, but they still haven't pinpointed the cause.  It could cause the city to spend over $40 million to replace the entire system in that area.

In Coffey Park, a 1980s built subdivision, pretty much all of the underground electrical grid was damaged.  The utility companies had to erect temporary poles and create a new system on the fly, and will be rebuilding the underground system as well.  So far it seems that the sewer system survived OK.  But there were problems with a lot of plastic drainage culverts, and of course runoff concerns.  That will be a problem in Redding too where a lot of the damaged areas are on the tops of slopes...many of which lead to the Sacramento river.

Santa Rosa lost 5% of it's entire housing stock--and we were already in a tight market.  The housing crunch turned to a housing crises literally overnight.  This caused a wave of "panic buying" where homes on the market were getting bid up way over the asking price.  Overall, prices rose nearly 30% from pre-fire levels.  In recent weeks the frenzy has started to slow and prices seem to be settling down and my guess is they start to inch closer to pre-fire levels.

A lot of my investors started asking me after the fire if we were going to raise a fund to get involved in the fire rebuild.  At first my answer was no.  Building homes is hard enough, but doing it in a disaster area with a lot of unknowns would be a major distraction.  But as it always seems to go in business the right opportunity came along and we are now partnering with a hall-of-fame builder in Santa Rosa to rebuild homes here.  I wouldn't attempt it on my own, but with a highly experienced team executing the construction aspect I am confident that we will do well.  In a year I'll probably know more about disaster rebuilding than I'd ever have imagined.

As for Redding, the healing will take time.  They are very fortunate that the structure losses were what they were--they could have been much worse because that fire didn't seem to be showing any signs of a course-reversal once it crossed into town.  I'm glad they finally got the upper hand in the populated areas at least.  

One thing I've noticed here in Santa Rosa is a lot of fire victims elected not to rebuild and instead either bought other homes or moved out of the area.  Redding will probably see some of that as well.  I have a 64 lot subdivision project in Red Bluff that I've been sitting on for over a decade--maybe now is the time for someone to build it out.  Some people might not want to move back in as close to the hills as they used to be but still want to stay in the same general area.  I'm sure the housing will be needed--but no matter what it won't be in time--it's needed today!