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

Question

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 · Answer

@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.

Jay Hinrichs · Answer

being born and raised in N. CA and being a land salesmen for the first 15 years of my career I have sold land in all those locations.. but more in Lake Co which had its fair share of fires. and the Napa Sonoma fire last year. I used to live at Silverado in Napa and a good 30 plus friends of mine lost their homes.

I really don't know the answer.. its going to take years to fix all this. but you take Paradise and I have to think many there have to just move altogether the business 's they worked at are gone.. were do they work ??

Its much tougher and longer to bring those properties back as they have to be rebuild totally. then say what happened in Houston flooding.. Where within 30 days water is gone and it can just be flooring and sheet rock.

Scott Wolf · Answer

@Tyler Sawyer I am a real estate broker and investor in Chico. I want to share that I have seen market demand being pushed out to Corning and even Willows to a lesser extent. (That's not mentioning Orland and Hamilton City, which happened very quickly after the fire.) In Corning I saw one house jump from about $185,000 to $235,000 in value, and it sold because it was nice and in one of the most affordable price brackets for stick-built homes.

I also wanted to caution you about purchasing a rental property that doesn't cash flow well. We are likely to be at a high point in market prices right now. We had a duplex burn up in Paradise, but thankfully, no one was hurt. It was renting for $1700/month. We had bought it in 2012 for $121,000, so the cash flow was rather good. If we had bought that same property this year at pre-fire prices, it would have cost us around $240,000, making the cash flow a break even or possibly losing scenario, depending on the loan. Sometimes the wisest course of action is to look for better market conditions at another time and/or another place. We have been buying single-family rentals out of state this year (3 total) because our region's rentals don't make a lot of economic sense in my mind until the market drops.

Jay Hinrichs · Answer

@Brian Burke further more this might be the catalyst to get Southern Oregon back on track .. Specifically K Falls.

which has been in depression ever since Jeld Wen was sold to Canadian firm and closed.. As it relates to Paradise many retirees there and so health care is important and shopping.. and with no sales tax. with prices in K falls being probably 50% less than Redding South.. and of course Ashland Medford Grants pass.

and even Maybe god forbid there Is a RUN on Lake co.. given there is health care shopping close to bay area and cheap or cheaper real estate than most N. CA locations..

Just Sunday morning Musing and or wishful thinking.

My bank took back a huge 600 lot project in K falls I could have it for NOTHING.. literally .. pay us when you can type thing. :)

Karen Margrave · Answer

@Tyler Sawyer I don't think being new to this that you want to gamble with what the markets are going to do. There's so many factors aside from the fires playing into real estate in CA right now. As @Jay Hinrichs @Brian Burke mentioned, Paradise didn't have a broad economic base to begin with. Many of the homes that burned, were older mobiles in parks, and most of the homes were in the more affordable range, which would be hard to duplicate now. Many of those people will relocate to other areas nearby will pick of some people. Some will leave the state.

As for Redding, I know in some of the burned subdivisions, developers swooped in, picked up the lots, and they're now back on the market for pre-fire prices. Minus all the beautiful views and trees that once were there, and with the added burden of the potential for mudslides, etc. I don't think it's going to be that easy to get people to rebuild in those neighborhoods. They may buy on the other side of town. However; a large builder pretty much has a lock on that with a subdivision ready; with available lots and ready to build on.

Many of the vacant houses at the time of the fire were taken off the market and put into rentals, as insurance companies pay good, and there was a huge demand.

So far there's only been a few permits work there way through to the issuance of a building permit. The Chief of Police being the first one. So nothing is going to happen fast.

My daughter that's a broker in Redding has been selling stuff in Red Bluff, and my sister sold a house in Willows.

As far as Klamath Falls, I think the cold is what probably would be a big factor as to seniors relocating, etc. If someone isn't used to driving on icy roads, they're probably not going to like that.

Dylan Vargas · Answer

@Tyler Sawyer Welcome! The market is very strong for sellers right now in Chico, Paradise and the surrounding communities. The over asking price stories are true. The inventory in Chico went down to a very small number but has bounced back a little as many are deciding to list their homes to sell now. Still a very strong sellers market even with the new listings. I have a business I used in Paradise leave the state for Oregon as they lost everything and housing is very tough even for rentals in Chico at this moment. This morning there are only 8 houses in Chico under $250 k and most are located in Chapmantown (not the best area but getting much better). If you can find a fixer off market in the Chico area and some surrounding communities you can do well. Orland, where you are living ,is a great fit as its only 19 miles from Chico. Hamilton City is a great fit also. All the surrounding farm communities are great fits. I think Corning, Los Molinos, and others say 30 minutes away are a little riskier with regard to prices rising much due to fire. Just my opinion. Keep in mind the Redding Carr fire was much different in amount of homes destroyed and several options for housing in nearby communities are available within a very short drive (Anderson, Cottonwood etc). Paradise will rebuild and is a great place to look once the area gets cleaned up. Chico is a gem that people love living in. Paradise is only 14 miles away and less from South Chico. Oroville is hit and miss from its bad rap which is unfortunate as there are some nice areas of Oroville. We lost a place in Concow but had a place survive in Magalia. We are waiting to get in to see our Magalia home in next couple of days. Good luck and keep us posted.

Gene Hacker · Answer

I had four rentals in the evacuation zone for the Erskine fire. One was a total loss. The community lost close to 300 homes. Both home prices and rents went up after the fire and have stayed up.

I have seen FEMA trailers set up. I am not sure how many but they did step it to help. I remember hearing that the FEMA trailers were only available for those without insurance but I am not sure how accurate that info was.

Mary M. · Answer

And now folks know why I moved back to OR. It is way too spendy in N. CA.

I did hear on NPR that 6 (SIx!!) trailers were brought in by FEMA.

They only have what 12,000 to go?

Karen Margrave · Answer

@Jay Hinrichs from what I've seen in Redding, FEMA did very little. As to Butte County I see they have trailers they were going to put in Chico on a piece of property, but some of the neighbors got up in arms and stopped it, complaining about traffic, and the usual NIMBY stuff. It's terrible, many are families with children and trying to get them back in school and life stable again.

Jay Hinrichs · Answer

@Tyler Sawyer most of these areas were subdivided prior to the subdivision map act.. so rules were very lax at the time

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

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

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