Rebuilding After California Wildfires A Long Road As The State Grapples With Housing, Construction Worker Shortage
Want to get a jump-start on upcoming deals? Meet the major players at one of our upcoming national events!
Now that the Camp Fire that hit Paradise, California, and Woolsey Fire that charred parts of Malibu and Ventura County in November are completely contained, the hard discussions about rebuilding in California begin — again.
But it won't be an easy task.
Jenifer Levy's former family home on Woodland Drive in Paradise was one of the thousands of homes burned down by the Camp Fire. So were the homes of most of her former neighbors.
“The entire block was wiped out,” Levy told Bisnow. “I think there is only one that didn’t burn down.”
Levy graduated from Paradise High School Class of 1995. She went to UC Berkeley and eventually settled down in Orange County. Many of her friends remained in Paradise or cities in Butte County, about an hour-and-a-half drive north of Sacramento.
Last week, Levy gathered donations such as school supplies, backpacks, books and gift cards from community members, loaded them on a U-Haul and drove five to six hours north to Chico to hand them out.
She is doing whatever she can to help her hometown.
“More than 50,000 people have been displaced,” Levy said. “Eight schools were affected by the fire. At least one elementary school is gone. The junior high is partially burnt. At least three other public elementary schools are burnt. The Adventists school is gone. The Catholic school is partially gone. Part of a high school is gone ... The town council is holding their meetings at a park and are homeless. Thirty-five firefighters lost their homes during the fire, 18 police and staff. Over 4,000 have lost their homes. 100 teaching staff lost their homes ...
"The fire has had a huge impact," she said, choking up. "They have a lot of work to do up there. They have a lot of rebuilding."
The Camp Fire, which broke out Nov. 8, ravaged more than 153,000 acres in Butte County. With about 14,000 homes, more than 600 commercial buildings and more than 4,000 other structures damaged or destroyed and the deaths of at least 85 people, experts say the Camp Fire is the deadliest and most destructive wildfire in the state’s history.
Authorities are still trying to determine the cause.
The total losses from the Camp Fire are estimated to be between $11B and $13B. The Woolsey Fire in Southern California is estimated to be an additional $4B to $6B, according to CoreLogic.
Combine those figures with last year's wildfires that destroyed as many as 32,000 homes, 4,300 businesses and 8,200 vehicles or equipment throughout the state, and the total losses from wildfires in California reach more than $30B.
Last year, the state's Department of Insurance received claims of nearly $12B from the victims of the wildfires.
Malibu and Paradise city officials have already said they plan to rebuild, but that will be a challenge as some areas of the state are still rebuilding from last year’s fires and California has a shortage of construction labor and subcontractors.
“This is going to put a tremendous amount of demand on labor,” California Building Industry Association President and CEO Dan Dunmoyer said. “It’s just going to push the price point up to build. That is going to make it more costly and challenging."
CoreLogic Senior Director Tom Larsen told Bisnow there is going to be an inflation of costs to rebuild.
"In the strictly economic sense, you have to bring in outside labor, provide per diem, hotel and other costs," Larsen said. "Rebuilding [in Paradise] is going to generally cost more than a normal settlement. It'll cost more to replace that same house."
California's Housing Shortage
California is facing a housing crisis and the wildfires that have charred, damaged or destroyed homes in recent years are deepening the state's housing crunch.
Despite more people moving out than in, housing the influx of people that do migrate here and currently live here has become a political flashpoint.
In the past 10 years, the state has produced fewer than 80,000 new homes annually, far below the projected need of 180,000 additional homes per year that need to be built to keep up with demand, according to the California Department of Housing and Community Development.
Homeownership rates are at their lowest since the 1940s and nearly 3 million renters are paying more than 30% of their income on housing.
The lack of supply is contributing to the state's rising home costs and growing income inequality, the state's department of housing found in a report released earlier this year.
Leading up to the election, now Gov.-elect Gavin Newsom said his goal would be to construct more than 3.5 million new housing units in California by 2025 — more than five times what the state is currently producing.
"We have tremendous demand for housing in California," the BIA's Dunmoyer said. "It's never been greater or higher and there is a tremendous need for more housing units."
Dunmoyer said this year the state has made strides, producing 120,000 new homes, but it still falls short of the 180,000 needed to keep up with population demand.
"Our birthrate is growing faster than our exit rate," Dunmoyer said. "You have a lot of families that are beginning to grow and develop but they don't have a place to live. It's very expensive and it's a very long commute to their jobs."
Dunmoyer said the state's housing crisis is fueled by a labor shortage and the local city and statewide complexities of building housing.
"Since the Great Recession a lot of people that were in this [labor and trade] industry either left the state or left the industry," he said. "And at the local level there is a tremendous amount of fees, delay processes, regulations and the state level piles on top of that ... Building a house in California is so much more difficult than any other state."
Paradise Mayor Jody Jones told NPR she and the rest of the council and community members are determined to rebuild the town of about 26,000 people.
"We intend to rebuild," Jones told NPR. "Every single person on the council lost their home, and we all intend to rebuild. There's a grassroots community effort that's been started. It's called #ParadiseStrong, and people are posting their visions of what the town could be. Yes, we're going to rebuild."
It is going to be easier said than done.
Dunmoyer said rebuilding in Paradise poses a lot of challenges.
“The issue on Paradise is quite unique in that it is very isolated," Dunmoyer said. "It’s not surrounded like in Santa Rosa by a large metropolitan area where there’s large areas to live and rent and people to draw from in terms of workforce.
"It’s going to get harder to get labor up there," he said. "They have to live on their campers or fifth wheel [campers] or even rent a hotel room. You have to find a way to drive in or create short-term housing. ... And that’s going to put more demand on labor in the non-fire-impacted areas. It will increase the labor challenge and drive up the cost to build housing."
CoreLogic's Larsen said there is more to rebuilding than just erecting a new house. It has to be a community effort.
"What if you build your home but 90% of your neighbors are gone?" Larsen said. "What's going to be left of the community?"
"It's a financial hit," he said. "It's a big inconvenience and plus it's emotionally — for a lot of people — devastating."
Dunmoyer echoed Larsen's sentiment, saying the fastest way to rebuild — if all of the residents have adequate insurance — is to find one or two developers to mass produce homes with a choice of three or four different floor plans. There are a couple of developers mass-producing homes in Santa Rosa, where thousands of homes burned in last year's wildfires.
"Communities need to unite together," Dunmoyer said. "If you all work together, you can get a developer there to construct one house, then move on to the next house and so on."
Dunmoyer said the benefit of mass-producing houses is that construction and trade labor are already there working and the company can save on building material costs. Homeowners can rebuild in as little as three years under this model. But if residents want a custom-built home, they will have to find an architect and contractor and go through that whole process, he said. That approach could take five to six years to rebuild a house.
Levy, the former Paradise resident, said there will probably be an exodus of people from the area, but many people she knows do intend to rebuild.
She said Paradise was a "Mayberry Town," where everyone knew each other and called the small-business owners by their names.
"It was a beautiful town," she said. "There was a lot of red soil. You could never wear white. There were Ponderosa pines and canyon views on each side of the town. There's wildlife everywhere. I once had to miss school because there was a mountain lion on the driveway. We used to get in trouble for swimming in the creeks. It was beautiful."
She said many of her friends are planning to buy a trailer and live on their home lots while they rebuild.
"Paradise is a generational community," she said. "There are families that have lived there for more than 100 years. I don't see them going anywhere."
CORRECTION: DEC. 6, 4:45 P.M. PT: A previous version of this story had incorrect information on renters who pay more than 30% of their income for housing. The story has been updated.