Housing lull helps fire victims
SAN DIEGO – The housing slump is spreading gloom through the economy, but it’s turned out to be a silver lining for thousands of Southern Californians who lost homes in last October’s wildfires.
Families have their pick of builders. Idled subdivision builders are willing to take on single-home projects. One developer is taking burned lots as down payments on new tract homes that aren’t selling.
More than 1,000 foreclosed houses repossessed by banks are up for auction in fire-ravaged areas.
“Daily we get fliers in the mail from people wanting our business,” said John Vehar, 56, an AT&T Inc. project manager who lost his home in Ramona, north of San Diego.
The abundance of unsold houses and underemployed builders and contractors has helped Southern California get off to a fast recovery after nearly 2,200 homes were destroyed from north of Los Angeles south to the Mexican border. Flames charred about 800 square miles and killed 10 people.
Insurers are putting money in people’s pockets. They have doled out $1.27 billion to cover wildfire damage, more than half the total claims of $2.26 billion. Industry watchdogs say companies may be trying to avoid lengthy payment disputes that dogged them after Southern California’s massive wildfires in October 2003.
“This is the fastest ever – they’re writing the check and getting out of Dodge,” said George Kehrer, a lawyer at Community Assisting Recovery, a nonprofit group that counsels wildfire victims.
The state insurance commissioner has received only 138 complaints about wildfire coverage. Only 22 relate to underpayment by insurers, far fewer than in 2003.
Southern California, once one of the hottest housing markets in the country, was already suffering a severe housing slump that has only deepened since the fires. Home sales in a six-county swath were at their lowest in 20 years in December, according to research firm DataQuick Information Systems. New home construction is at a standstill.
The median home price in Southern California fell to $425,000 last month, the lowest since February 2005. With potential buyers pinched by the tightening credit or waiting for prices to fall even lower, fire victims flush with cash from insurance payouts are prime targets.
“In a slow time for homebuilding, it’s a way for us to keep our people employed,” said Mick Pattinson, chief executive officer of builder Barratt American, which is soliciting heavily in the Rancho Bernardo area of San Diego. It has become easier for Californians to use insurance checks to move elsewhere, instead of rebuilding on their burned lots. After the 2003 fires, insurers were required to pay only policy minimums to customers who wanted to move. Under a new state law, they must pay whatever the policy will cover to rebuild on the burned lot.
“Right now the market is such that you can buy a house for a lot less than you can build one, especially with construction costs up,” said Chris Hasvold, a broker in fire-struck Fallbrook, north of San Diego. “The appeal of moving elsewhere is that you can get on with your life.”