Effects Of Fires On Housing Market Evident In Year Since Wine Country Fires
As those going through the aftermath of this year's California wildfires start to take account of what was lost and what it will mean to rebuild, those in California's wine country are looking back at what progress has been made since fires ripped through that area a year ago.
In a report released late last week, Compass Chief Economist and Vice President of Business Intelligence Selma Hepp analyzed what last year's fires meant for home and property sales in the North Bay, particularly Sonoma County, which was hardest-hit by those fires. The county has not fully recovered in the year since the fires, with all housing indicators suggesting Sonoma County markets have cooled off more than the rest of the Bay Area, Hepp said.
The numbers may reflect some hesitancy among buyers to buy in areas that have recently been hit by wildfires.
"As major previous California wildfires have shown — such as the Oakland Hills Fire in 1991 and the Cedar Fire in San Diego in 2003 — communities generally return to their pre-disaster conditions within a year or two following the incidents and market activity lines up with longer-term trends in those respective counties," Hepp wrote in the report.
This year's Camp Fire, which killed at least 85 people and damaged or destroyed more than 18,000 homes, commercial buildings and other structures, is now the state's deadliest and most destructive. But last year's Tubbs Fire, which raged across Sonoma and Napa counties, was previously the most deadly and destructive: 22 people died and more than 5,600 structures burned.
Hepp's report looked at North Bay housing markets before and after the Tubbs Fire, which started on Oct. 8, 2017. While the North Bay's housing sales activity is aligned with the rest of the Bay Area's ups and downs this year, the region followed a slightly different trend right after the fires, Hepp noted.
North Bay monthly home sales declined 11% as the fires ripped through the area last October. Sales then jumped by 15% after the fires and remained up until February. In March, North Bay sales activity returned to following overall trends.
After the Tubbs Fire, there was a rush to buy, and about 15% of all buyers purchased a home because they had lost their previous home in the wildfires, according to the report. About half of those who bought because they had lost homes said they were trying to stay local. There was a 29% jump in November sales in neighboring Marin County.
Investor activity also moved up from 1% of buyers to 8% after the fires.
So far this year, 504 residential lots have sold in Sonoma County, a 265% increase from the 138 that had sold by this time last year. Hepp found that 389 of the lots that sold —more than 75% — had been lost to wildfires, and 99% of those were in Santa Rosa's 95403 and 95404 ZIP codes. Sales of lots burned by the fire peaked in March and have since leveled off, Hepp reports.
Of those who sold property, 11% did so because they lost their homes in the fires. And some of those who sold left the state: out-migrants made up 11% of sellers, compared to 2% before the fires.
Since March, North Bay home sales have slowed, even more so than in the rest of the Bay Area. From March to September, the North Bay's monthly home sale declines were about 6 percentage points lower than for the Bay Area as a whole.
Sonoma County sales have stayed down, even as Napa and Marin counties have improved. In September, Sonoma County had a 26% drop in single-family home sales, the largest year-over-year decline of all Bay Area counties comparing activity from before the fires and a year later.
Hepp said it is hard to parse how much of that may be due to the fires and how much is from affordability, since prices in Sonoma County jumped after the fires, which may have turned off buyers. She said she thought the fires have had an effect on people from out of the area or out of the state who had been thinking about moving to California but changed their minds.
Hepp ends the report by noting that this year's Camp Fire may take much longer to recover from since a larger share of the housing stock was lost and the challenges facing new construction in the form of labor, cleared land and lumber shortages.