California fires and housing
With the number of homes burning in the southern California fires, I had to take pause and wonder what effect there may be on their local housing market. Speculation is welcome, but data points for the effect on housing from other natural disasters would be even better.
Comments
Different natural disaster, but do you remember those 6 townhomes on Lakeview Drive just below St Marks cathedral?
Even after the foundations got washed out and they were uninhabitable, the owners were still paying the mortgage on them for years. Turns out that because of the slide the land was basically worthless as well.
As for the houses that got burined up the insurance would pay! Most people have lived in that area for awhile and would be able to build a bigger house with the same money. If a house is 20 or 30 years old and you get an insurance check to re-build in the same spot (fire damage to the same exact area would be reduced due to the lack of underbrush to burn again).
It will be good for the building companies as they cant completely shut down, so this will create REAL demand for Southern CA new construction, lol. Overall I feel sorry for those that lost everything, yet it will releave some stress on the housing market in that region due to people buying other houses that are currently on the market.
And how many natural disasters have you lost a house in Mr. Finance? Try having some empathy for these people.
Just like how Katrina was good for the people of New Orleans right? You just wrote the clinical example of the broken window fallacy. In summary, you're wrong and you're an insensitive clod.
I remember those! I think at the end of the day the only money they got was from the city. (in other words, they were screwed)
Their insurance did NOT cover it
and as incredible as it may seem, I'm reasonably certain they resold those lots last year - or at least tried to... caveat emptor
source
A representative of State Farm Mutual Automobile Insurance Co., the largest home insurer in the U.S., came to the charred remnants of Tunnell's home to tell her the company would pay just $220,000 of the estimated $306,000 cost of rebuilding the house."
http://www.bloomberg.com/news/marketsma ... tory1.html
I remember reading that article in Bloomberg Mag. It was incredible. The insurance companies would low ball payment then simply dare you to enter a long legal battle to get what it is really worth. It wasn't just ripping people off, it was taking advantage of people who had just suffered what was likely the worst disaster of their life. It was pretty disgusting.
Those lots were listed forever with big price cuts, but the only deed transfer I saw was a foreclosure. Funny that these units were permitted during the late 80's RE boom. Developers were building on whatever scrap of land they could get their hands on regardless of the risks. These were NICE homes too. I remember checking them out after they'd fallen into disrepair and while 2 of them were reasonably upright, one was tilted so far trash was collecting against the down hill wall.
But the cycle repeats, as developers again scramble for any scrap of land in prime neighborhoods. A friend of mine mentioned his brother was builiding a view home in North Beach on a "vacant lot" - my first thought was "where are there vacant view lots on that road? I just drove through there and didn't see any" Sure enough, it's on a known slide area, hence why nobody has built anything there before now. Not sure I'd consider that a building lot. I never heard if he got the permits.