The Woolsey Fire – Six Months Later

An editorial on the impact the Woolsey Fire has had on local real estate.

The Woolsey fire has had a definite impact on all of us. Unprecedented in nature, the fire destroyed over 1,500 structures within just a few days.

I am Gary Jacobs, a local Realtor for over 12 years in Westlake Village. Agoura Hills, Oak Park, and Westlake Village have been my home for more than 35 years and have also been the main areas I specialize.

I’ve had the unique privilege and challenge of gathering information on behalf of my Father- in- Law as his home was one of the first to burn down to the ground. By helping him through this process, I’ve gained an intriguing perspective that I would like to share with you.

As you can imagine, I was requested to research and help guide him through his questions and concerns. This editorial describes my opinion formed from this research and some of the most important points we discussed. I wanted to share this information

“My house burned down... What’s my lot worth now?”

This is the question on everyone’s mind who lost their house in the fire and the question I’ve heard most. Should I rebuild? Should I sell my lot and buy something else? Building will likely take over two years as permits, and construction is slower now because of the Woolsey fire and the destruction from the Thomas fire last year. The value of your lot depends on its size, its location, what completed homes sell for nearby, and a few other factors, like timing. The lot is worth less right now if there is still debris and noticeable fire damage nearby. In Oak Park, a few investors almost immediately offered my Father-in-

Law about 30% less than what his lot is probably worth on the public market. My advice is not to rush selling and wait until the debris is removed and the lot has a nice clean dirt look. That way, builders, investors and others who might want to re-locate on your lot will appreciate the lot and offer you the most. The more curb appeal the lot has, the higher the offers will be, just like with houses. Supply and demand should also be taken into account. If you are planning to sell, it is likely better to list sooner than later. You will avoid the inevitable competition that’s coming and feed the hungriest buyers who are checking the market for lots to go up for sale. Once there are more lots available for sale, and more buyers have purchased the market may soften in some areas as it did in the Thomas Fire.

“A house near me burned down. How has that effected the value of my house?”

In the short term, the house that burned down near you had negatively affected your home value compared to areas not affected. This is due to the curb appeal being less perfect with that burned lot being so close to you. People get second thoughts about buying near a burned house. This can negatively affect your sales price in the short term, however, as time goes on and the debris has been removed, your property will quickly rebound... And best of all, when new construction goes on that burn lot, it might even increase your value some as the neighborhood curb appeal and comparable sales are elevated that much more.

Another factor to consider is that there is a shortage of available homes to buy right now and hundreds of more potential buyers than in typical years. If you are considering selling, and you are very close to burned homes, find out when the clearance it to take place. Most areas are just a few weeks away. If possible, list as soon as your area is cleared. The hills look green and the wildflowers are blooming so clearing the debris pile at the end of the street will help complete the picture.

“No home near me burned down.. How has that impacted the value of my house?”

This is the best possible case. Once again, the shortage of housing due to the fire may increase the selling price of your house. This can vary from area to area, but people feel better about buying in areas that had no fires as compared to the blocks where houses burned. If you are considering selling soon, now may be a good time because your home will stand out from those in the immediate burn areas and you don’t have to compete with the wave of local new construction that will likely hit the market around 2021.

I am thinking of selling my house in 2019. How has the fire affected the value of my house?”

The answer depends on your home’s location, but generally speaking, demand right now is high, inventory is low, and interest rates have come down quite a bit. If you were to sell in 2019 you should experience a solid sales price, a relatively short time on the market, and perhaps multiple offers.

I am thinking of renting out my property, how has the fire affected the rental market?”

Last November and December, if you were renting out a house, your rental could draw as much as 30% higher rent than the market would typically bear. This is because Insurance Companies were picking up that rental cost for its insured clients for up to 2 years and the supply of rentals couldn’t keep up with the demand. As time has passed, the numbers are coming down to the real rental price as most fire victims

have since been re-located. It’s still the Landlords marketplace, as the purchase market is tight, but generally, sale prices have risen faster than rental prices.

If I don’t want to build, what is the market like for lots?

This is the first time lots are available for building in decades in many of our communities! I work with a few investors that are scouring the fire zones to acquire lots to build new construction. As you might imagine, contractors and builders know how to build more efficiently than what the average homeowner is typically quoted. Many can build high quality, modern homes in the $200’s-$300s (per sq ft). These builders have been transforming nice lots with tear down homes into amazing modern homes in Encino and Sherman Oaks for years. If you do the math on what new construction sells for, you’ll understand why the demand is high. Your lot is being looked at every day by an investor, a major contractor or your neighbor whose best friend is a contractor. There has never been such a unique opportunity for new construction to be built and sold, or lived in. To builders and contractors, these are exciting times.

If I rebuild, will my newly constructed house be worth more than my old house before it burned?

Your new house will be worth more than your old house. Probably a lot more, depending on what you build. Almost everyone that can afford it, prefers new construction. As time goes on, the market will tell how much of a premium the new construction will bring in our neighborhoods. If our market reacts similar to Encino, Sherman Oaks, Studio City, where new construction in high end established neighborhoods is very common, new record comparable sales will be set in the coming years. A new custom home will likely be selling for as much as 50% more per square foot than the forty year old tract home next door.

For more information or to be connected with specific resources, please email gary@garyjacobs.net. I’ll contact you directly and connect you to the resources that can best help with your situation.