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Home values after the ashes

Though the deadly blazes have changed communities forever, analysts say housing prices are likely to recover quickly.

November 02, 2003|Gayle Pollard-Terry and Diane Wedner | Times Staff Writers

A Century 21 for-sale sign stands like a sentry before the charred skeleton of a hilltop house, which until last Sunday Harriett and Bob Guttman had called home for two decades.

The sign was left untouched by the capricious wildfire that engulfed the couple's three-bedroom north Claremont home, which they had listed a month ago for $750,000.

"All the homes around me are perfect and whole," said the Rev. Harriett Guttman, a police chaplain. "Mine [is] leveled."

The fires, which have destroyed more than 2,800 homes and caused more than an estimated $2 billion in losses in Los Angeles, San Bernardino, Ventura and San Diego counties, will have the short-term effect of disrupting plans of some home sellers and buyers. In the long run, however, even homeowners unscathed by the fires will have to cope with changes in their communities because of the disaster.

As tragic and costly as the property losses have been, real estate experts expect the regional effect on sales to be temporary, "a small blip on the radar," because of Southern California's booming housing market, said Leslie Appleton-Young, chief economist for the California Assn. of Realtors.

Home prices are likely to remain strong because of low interest rates and continuing demand. Communities in San Bernardino and Riverside counties and those around Simi Valley have been among the fastest-growing suburbs in the state over the last decade.

"We have a housing shortage in California," Appleton-Young added. "Some fire victims will leave, but 10 more people will take their place."

The pace of recovery for neighborhoods and communities, however, may take longer, depending on the scope of destruction, the resources and the political will. Already some stores and restaurants have reopened for business in fire-ravaged San Diego.

Based on past disasters, recovery could take at least four years, the time it took Oakland to rebuild after a 1991 fire that killed 25, destroyed about 3,000 homes and caused $1.7 billion in damage. Malibu's recovery timeline was about the same after the 1993 fire that also roared through Calabasas and Topanga Canyon, killing three, burning 268 homes and causing $219 million in damages.

Within four years, Laguna Beach was on the mend from 1993 wildfires that destroyed nearly 350 homes in the area and caused damages estimated at $528 million. In the 1994 Northridge earthquake, 57 people died, 200,000 homes and apartments were destroyed and 114,000 other buildings were damaged, destroyed or left uninhabitable. Nine years later, the widespread damage area, from Sylmar to Santa Monica to South and Central L.A., was nearly fully recovered at a cost of more than $20 billion.

Typically, victims of disasters and would-be home buyers wait a few weeks to six months before making decisions about rebuilding and buying on devastated terrain, real estate experts say.

The Guttmans, who are about to break ground on a new home in Palm Desert, have tentatively decided to clean up and sell their 15,546-square-foot view lot so "someone else can build their dream house," said Harriett Guttman, who was ministering to homeless fire victims when she got news of the loss of her own home. Their agent, Yolanda Maldonado, believes the lot can sell for $350,000 because it is on a street where other homes are intact.

In the case of the Oakland hills, rebuilding began about six months after the fires because the city streamlined the building-permit process for fire victims, said Larry Rosenthal, executive director of the UC Berkeley Program on Housing and Urban Policy. Eighteen months after the disaster, huge new housing developments were well underway.

Although the rapid reconstruction helped homeowners quickly lay down roots and created a job bonanza for construction workers, sound planning principles were sacrificed.

"It's chaotic there," Rosenthal said. "Drive through the streets and you'll see textbook examples of homes that couldn't have been built prior to the fire."

After Malibu's fires

Malibu had a similar experience in which its goodwill toward fire victims resulted in unintended consequences. The city waived building-permit fees and offered "compassion allowances" to fire victims, giving 10% more floor space for their new homes.

Malibu City Atty. Christi Hogin said that some owners whose homes were not damaged were upset because they felt crowded by the new, larger homes of fire victims, which also blocked their views.

Creating more ill-will among some longtime residents was the fact that they could not take advantage of the relaxed regulations while newcomers who bought fire-ravaged lots could.

In Northridge, some projects, such as new buildings on the Cal State Northridge campus, were completed just last year. The recovery ordeal was prolonged, in part, by a recession that had hit the Valley especially hard and had already sent housing prices plummeting in Los Angeles.

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