How are the fires in LA likely to affect the OC housing market? Well… they are going to, but not how you may think.
Fast Value: If you’re in the market to buy, talk to insurance brokers just like you would mortgage brokers. In the short term, we will see an effect on supply and demand. We will see more demand in OC than we otherwise would have. In the long term, we will see increased pain and cost in getting insurance.
Let’s talk about the impact we’re seeing (and going to see) in both short-term and long-term effects.
Before we get into it, I am deeply sorry for all those affected. If you have been affected personally and want help, let us know.
First, let’s talk about the short-term impacts.
We will (and already are) seeing an uptick in demand for people who need housing. This will likely have a very short impact on demand. It is not anything that should change your timeline.
In the weeks and few months after the initial impact, this demand will go back to normal.
The market that will be affected the most is the rental market, especially the short-term rentals.
If you’re renting and need to move in the next 60 days or so, you might want to consider doing it sooner than later. Much past that, we shouldn’t’ see much of an impact to that market either.
As for prices, I don’t expect there to be any meaningful short-term impact.
However, we will definitely see some sellers try to take advantage of the situation. As disgusting as that is, we are currently seeing that there is enough inventory for this to not be a problem.
You might see some sellers try to “test” the market at higher prices if they have rather low motivation to sell but would at a “make me move” price.
Again, I wouldn’t be concerned with this if you’re currently in the market to buy.
Long Term Effects
The long-term effects are going to highlight a few areas that are already pain points in the SoCal market.
Insurance has been difficult in SoCal for the last year or so, and this is going to make it worse. More insurance companies will withdraw their coverage altogether. Some are already adjusting rates up, even if they have recently.
Now is a great time for current homeowners to start shopping different insurance companies so you can prepare. Don’t get caught off-guard by this.
A lot of townhome/condo HOAs are having a hard time keeping up with their insurance policies. This is causing many HOA fees to raise a lot. Plan for this in your monthly budget. I’ve heard some stories of HOAs raising their fees by $200+ per month.
If the problem is bad enough, some HOAs might need to apply a ‘special assessment’ to homeowners. This is often a one-time or payment plans; the costs range, but they can be significant.
A lot of HOAs already have deferred maintenance that they’re struggling to keep up with. They may choose to deal with all this at once. This can also cause entire neighborhoods to be placed on to ‘do not lend’ list.
Times like these are when we encourage you to use our expertise. We are happy to answer questions, give referrals and problem solve. If you’re already working with an Onyx Homes agent, reach out to them. Otherwise, go to OnyxHomes.com and click the Buy or Sell button and we’ll be happy to answer any of your questions.