California wildfires will worsen region's housing shortage
Officials: Santa Rosa lost 5 percent of homes
The deadly wildfires in Northern California add up to perhaps the worst natural disaster in the state's history. More that 7,000 homes and buildings have been destroyed and damages will run into the billions of dollars. More than 40 people have died and dozens more are still missing.
Meanwhile, displaced residents who need replacement housing, even temporarily, will be hampered by some of the highest rents and most expensive home values in the country.
The median rent in Napa ($2,636) and Sonoma ($2,633) was nearly double the national average of $1,430, according to the real estate-data firm Zillow. In Santa Rosa, where officials estimate that as much as 5 percent of the housing stock was destroyed, the vacancy rate was less than 4 percent for both apartments and single-family homes, according to the U.S. Department of Housing and Urban Development.
And demand is growing: HUD estimates Santa Rosa will need at least 1,700 new units over the next three years, but only 200 were under construction in the first quarter of 2017.
Frank Nothaft, chief economist with CoreLogic, which tracks residential housing trends, told the San Jose Mercury News that finding a place to rent will be tough. "Rents are up. Prices are up," he said. "Rental vacancies are well below the national rates.”
Buying a new home will also be a challenge. The region suffers from a shortage of homes for sale relative to demand, which has caused prices to soar.
Zillow's analysis found that the median value of homes in eight of the 10 neighborhoods most affected by the wildfires were at least twice the national average of just over $200,000. In Santa Rosa and Sonoma County, it's nearly triple at $599,000 -- up more 6 percent in the last year.
Demand far outstrips supply in the region. The number of available homes is down by more than 10 percent from August 2016, and in some places by more than 20 percent. Adding thousands of displaced families to to the mix has given rise to fears that prices will go even higher and drive out many existing middle-class residents
"Even short-term disruptions in housing supply, and an influx of new renters and would-be buyers, are likely to push prices up even further," said Svenja Gudell, chief economist at Zillow.