In Santa Rosa, the scramble begins for replacement housing
Soot and ash are still settling over Sonoma County's housing market, but real estate brokers and lenders contend the fiery destruction of a few thousand properties here will make it harder for both buyers and renters to find new homes.
The fires that struck the county last week could lead to fewer home sales and higher prices in the months ahead. However, experts generally hedged their predictions by pointing to the unprecedented scale of the disaster.
“We're all holding our breath wondering where the market's going to go,” said Mike Kelly, a longtime agent with Keller Williams in Santa Rosa.
Most interviewed Monday said they have yet to see much movement in the market one way or the other since the fires hit last week. But Rick Laws, senior vice president in Santa Rosa for Pacific Union International real estate agency, said in the past three days, his agents have been putting together more deals with buyers who have lost homes and are begging, “I need something, anything.”
Those buyers typically are well off, believe the available inventory will become more scarce and “they're going to do what they need to do to secure housing,” said Laws, who prepares The Press Democrat's monthly housing report. The deals he helped oversee generally were for 10 percent over the sellers' asking prices.
The housing market slowed last week after a series of catastrophic fires claimed at least 41 lives across four Northern California counties and 6,700 structures across Sonoma County. Some agents lost homes or had to leave areas under evacuation. Monday, eight days after the disaster began, at least two lending offices remained closed in Santa Rosa because they are still in evacuation zones.
Also, lending, insurance and title companies all have set up new safeguards to avoid costly missteps, including the sale of homes that burned to the ground.
In the days immediately after the fire, “I think everybody put things on hold,” said Bill Facendini, president and broker of Terra Firma Global Partners in Santa Rosa.
Until the flames are extinguished, many buyers are going to face extra hurdles in closing deals, brokers said. Insurance companies aren't writing new residential policies for a significant portion of the county. Without such policies, lenders won't approve mortgages. Also, title companies are taking extra care in closing escrow accounts.
Once the fires are controlled, buyers can expect a relaxation of such rules, brokers and lenders said. But the county already had a shortage of housing and “this is now only going to exacerbate the problem,” said Scott Sheldon, branch manager of New American Funding mortgage lender in Santa Rosa. “And as a result, housing prices are going to rise.”
Before the fire, county buyers purchased 427 single-family homes in September, according to The Press Democrat monthly housing report. That amounted to less than a 1 percent decline from a year earlier.
The median sales price last month was $620,000, an increase of nearly 4 percent from a year ago. The month ended with fewer than 860 properties for sale, a two-months supply of inventory at the current sales pace.
However, Laws and other brokers said the sales numbers seem less relevant today in light of the fires' damage.
Santa Rosa officials have said more than 2,800 city homes and businesses burned in the fire, including at least 1,000 homes in the northwest neighborhood of Coffey Park and 500 more in the northeast hillside Fountaingrove neighborhood. The lost homes could amount to roughly 5 percent of the city's total housing supply.
Looking ahead, sales totals could drop in the coming months from a decline in inventory, not demand, brokers said. Many who can't buy a home or condominium may try to find temporary quarters.
“We're going to have a big demand for rental properties,” said Gerrett Snedaker, a partner in Better Homes and Gardens/Wine Country Group real estate agency in Sonoma.
Already some agents said they are getting approached by people claiming to represent insurance companies and offering outlandish prices to lease homes listed for sale. One agent said it was unclear whether the offers are legitimate.
Those disaster victims that owned their homes free and clear “seem to be a little faster on their feet” and better prepared financially to purchase a replacement home, said Otto Kobler, branch manager in Santa Rosa for Summit Funding lending firm.
Kobler said both renters and home buyers of lesser means may conclude, “I can't afford housing here. I'm going to Sacramento.”
Both business leaders and an economist have voiced concern about the economic impact to the county if large numbers of workers are unable to find housing here in the coming months.
Brokers say already the fires are causing them to ponder new scenarios.
Glenn Gephart, general manager and one of four owners at Century 21 NorthBay Alliance real estate agency in Santa Rosa, wondered whether the value of a “lucky” home that survives a neighborhood firestorm may rise because of scarcity or fall because buyers won't want to live near a cleanup and rebuilding project that could take years.
“I have no idea which one of those factors is stronger,” Gephart said.
You can reach Staff Writer Robert Digitale at 707-521-5285 or firstname.lastname@example.org.