Camp Fire, Carr Fire, anyone have advice on the market now?

[Tyler Sawyer]

I'm located in Northern California with in a hour of both the Carr fire and Camp fire.  Both really divesting and pretty tough on the local communities.  Me being a newbie and what I have seen is some interesting trends with the market but not total sure how to evaluate it.  What I have heard is bidding wars for homes and in some instances for 30% or more of market value near the fires.  I have even seen this happen in my community which is like I said at least a hour away.  I'm hungry for my first deal but not sure if jumping to a more stable market would a better way to start?  Or could there be benefits with the market with such tragedy?

[Brian Burke]

@Tyler Sawyer I live in Santa Rosa, where we had the Tubbs fire last year, destroying 5,000 homes here.  We saw the same thing you are describing, homes being bid up around 30% over pre-fire prices in a “panic buying” scenario of fire victims seeking immediate housing.

There is no real estate investment “opportunity” to be found amongst this type of tragedy, at least initially.  I said this same thing when people asked right after our fire and it turns out to have been true.  There is opportunity if you are an excavation contractor, and there will soon be opportunity if you are a builder, architect, engineer, or trades person.  But no tangible real estate opportunity.

The benefactors of real estate opportunity are the people who already owned real estate outside of the fire boundaries but nearby.  Such as people in Chico, Oroville, and most likely even Redding, Red Bluff, Corning and other nearby communities.  They will likely see a surge of buyer activity as people seek to relocate yet still remain in proximity to the general area.  But if you didn’t already own this real estate, it’s too late.

And I believe that @Jay Hinrichs is right—Paradise might not ever recover.  With so few businesses remaining, the jobs are gone, but not only the jobs, the services they provide to the community are gone.  Many people might elect not to rebuild in a community that lacks easy access to shopping and services, or because the limited evacuation routes in a wooded area cause them too much concern about their safety.  And businesses might be averse to rebuilding in a community that lacks residents.  A classic chicken-and-egg scenario.

Another thing we saw was about a year after the fire prices floated back down close to pre-fire levels as the panic buying retracted.  The general consensus here is that lot prices are likely to fall in 2019 as people’s two years of housing costs paid by their insurance companies comes to an end, forcing them to get off the fence about whether to rebuild or sell their lot.

I have a 65 lot subdivision property in Red Bluff that I carried all the way through the Great Recession and have been waiting for the opporune time for it to be viable.  That’s the opportunity I see...this should be my year to sell this because someone needs to build it—they need the housing.

The other thing I did, back here in Santa Rosa, is raised a fund to rebuild homes and partnered with a local builder.  We just did this on the one-year anniverary of our fire and will build homes for probably the next five years.  Perhaps this could be an opportunity up there in a few months, but I’d be careful to study whether rebuilding is going to really happen before jumping in.