The Palisades real estate market will come to a “standstill” for some time as fires rage and tens of thousands of residents evacuate the area, according to an industry economist.
Deals will be delayed until the full extent of the damage is assessed, but movement in the market will kick back up again for homes that are left unscathed, Redfin’s Chief Economist Daryl Fairweather told FOX Business.
“There might be some jitteriness for the next few weeks, perhaps. But after the dust settles and fires are extinguished, I think that the impacts are going to be very localized only to the homes that were damaged,” Fairweather said.
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As of 4 p.m. ET, Wednesday, at least four fires were burning across Los Angeles County. Zero percent of the fires have been contained, officials told Fox News.
Additionally, more than 30,000 residents are under mandatory evacuation orders and tens of thousands have lost power. Governor Gavin Newsom declared a state of emergency, warning that the worst of the winds were expected between 10 p.m. Tuesday and 5 a.m. Wednesday.
Fairweather believes business will go back to norma fairly quickly for the homes right outside the evacuation zone, even those right next to the damage that are still intact. She doesn’t project those homes will have a hard time getting a buyer, given that the area is so “sought after.”
In 2021, Redfin published a report analyzing areas directly impacted by fires, and found there was a 595% average increase in the number of homes built during the three years after a wildfire. Comparatively, there was a 6% decrease in the areas that fell outside the fire perimeters.
Since the area is so valuable, she doesn’t foresee a mass migration out of the area and believes rebuilding projects will begin within the year.
Christopher Anderson, a Napa, California-based Redfin real estate agent, previously said that after fires, “local authorities tend to fast-track permits and design reviews, and push properties hit by fires to the front of the line” so communities can rebuild.
WATCH LIVE: WILDFIRE COVERAGE ON FOX WEATHER
He added that “they build homes in four to six months after fires, whereas normally it can take a year and a half for a builder to get a shovel in the ground.”
However, Fairweather said in Redfin’s report that wildfires themselves tend to make housing more expensive.
“After a town burns, builders come in and construct new homes, which are typically more expensive. And homeowners who stay frequently invest in making their homes more fireproof, which increases property value,” she said.
Realtor.com chief economist Danielle Hale also noted that home and rental prices can increase in the near-term as “homes on the market dwindle as homeowners put off selling plans to assess damage and displaced locals look to find temporary housing in the area.
But, “the longer-run outlook will be more mixed, dependent on how quickly rebuilding happens and whether the desirability of an area outweighs concerns about a potential repeat event,” she added.
In fact, in a separate Redfin report, the real estate firm, reported that builders are confident in rebuilding in high-risk areas given that the demand is there. In fact, more people are moving in than out of areas facing high risk from wildfires and other natural disasters tied to climate change, according to an August 2021 Redfin report.
On the contrary, Jake Herczeg, a licensed architect with an extensive background in property operations and chief operating officer at Ballast said building in “dense, urban areas like San Francisco, CA, safer long-term investments versus suburban and rural areas which pose higher risk.”
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