Could your household absorb a total home loss like is happening in Ca because insurance cos were permitted to suddenly drop fire coverage?

[cabanafrau]

There are plenty of modest homes and even modest neighborhoods in Pacific Palisades. Even in the uber-weathly areas there some older smaller homes that have been in the same family for many decades, not torn down to build ostentatious mansions.

Granted, due to location, location, location, those modest homes can be sold for a few million, but it’s not like the owners are swimming in excess cash. Rebuilding will be a struggle or financially impossible.

And factor in how building a house in southern CA is a night and day difference from 1-20-25 compared to 12-20-24. Building materials have not stopped a steep climb in prices due to many factors since things like the Covid shutdowns, labor shortages, Covid renovation boom, other disasters putting a dramatic increase on demand, etc.

Got past the sticker shock and delivery delays to secure your materials to rebuild? Good for you, now take a number and stand in the line and someone will call you back about when they might get around to discussing potentially getting you on the schedule to do the work. Talk about a line that could use a lightning lane.

This is long lists of entire communities in a major metro area. People are simply going to be scrambling for ways to keep a roof over their heads for years so they can attempt to resume their work lives while they wait and wait to sort out their permanent housing situation again. Rents will be eating into the lives of so many people in so many ways and changing futures as well.

This weekend it dawned on me that LA is poised to host the Olympics in 3 years. That's a monumental undertaking in and of itself. This was set to be a games with a bit less major prep needed, as a veteran host city with a vast array of venues to tap into. No doubt these fires will bedevil some of the details in ways unforeseen at the moment. Definitely not an issue that's any type of immediate priority, but the impact will be felt there also.

 

[lanejudy]

So say you bought a house for $30 million, and the cost to rebuild the house and itmes is $4.5 million. But the value of the land has fallen $10 million. Are they out $10Mil.

Unless they decide to sell and relocate, the value of the land doesn’t really come into play with regards to the insurance. Then it’s like any other sale — the price you get by selling may or may not be similar +/- your original buying price. If the land is no longer considered as valuable, you may end up selling for a loss, whether that’s now or 10 years later.

 

[Mackenzie Click-Mickelson]

Most of it is land costs. As you also said most of the materials are imported into the Port of Long Beach. Shouldn't the cost of those materials be the same or cheaper in LA than they are in Kansas City?

I guess you can make the argument that they charge more in LA because people have more money there. There is some truth to that. I couldn't believe that Washington apple cost way less in a Minneapolis grocery store than I pay in Seattle for them.

To the bolded yeah that's what I was getting at. I was more or less saying that availability of at least certain building materials and in some fashion the costs are more advantageous in certain places than others. Just because it's CA you can't assume that high COL means your building materials are more expensive in a de facto manner. There's transit costs associated with transporting items ones of which being on the coasts have advantages there. Things mostly come to the center of the U.S. by train and semi-trucks and that takes time as well as costs. These days the trains are longer (much longer annoyingly) so in some ways that slows it down further as they try to increase how much freight goes out at once. I do remember during the pandemic that the port of Long Beach had basically a worker strike where the truckers didn't want to pick up the materials well imagine how that affects businesses who need those materials across the country. ETA: this was when we were shopping for a car (which we stopped shopping because it was impossible to get a car in the metro) and the local Mazda dealer had told us they had 2 boats of cars stuck off the coast of Long Beach it was going to be at least a month probably two months for them to end up making it to our metro at that time.

Things like landscape rock..hmm..that I'm not sure. We have in my metro quite a good amount of places that quarry close enough. We've bought several tons (actual tons by weight) of river rock (technically we prefer the coloring of Missouri river rock as opposed to Kansas) from a nearby business for example for landscape rock. That's just an example but you can pretty much readily get those materials here.

I think businesses could choose to charge more in CA almost like it's an accepted thing people tolerate but that isn't meaning that it's more expensive to build there as in the materials and labor costs just because it's in CA is more or less what I was getting at.

 

[Mackenzie Click-Mickelson]

This weekend it dawned on me that LA is poised to host the Olympics in 3 years. That's a monumental undertaking in and of itself. This was set to be a games with a bit less major prep needed, as a veteran host city with a vast array of venues to tap into. No doubt these fires will bedevil some of the details in ways unforeseen at the moment. Definitely not an issue that's any type of immediate priority, but the impact will be felt there also.

I was thinking about that but I do think their initiative to be more green is now probably a really good decision. The fact that they were trying to use as much existing facilities and places as they could. The time and money spent on building a ton of new facilities only for them to be burned up or otherwise damaged would probably have impacted their ability to host even more severely not to mention if those new facilities hadn't been touched the costs of continuing to build them would really eat up other costs associated with such a large scale disaster as they've had.

An article from 3 days ago says that "None of the Olympic venues has been damaged by the still-burning fires that tore through Pacific Palisades on the city’s westside and Altadena".

The executive director of the Office of Major Events for LA stated "While our focus remains on healing and rebuilding, there is no reason to believe that the fires will adversely impact or delay preparations for the 2028 Olympic and Paralympic Games, which are already well underway." So hopefully that pans out to be true, but I think it's reasonable to think that something will be impacted as it could be an issue of diverting resources to the rebuilding or clean up efforts that will not help them maintain a steady pace of getting the city ready for the Olympics.

 

[cabanafrau]

I was thinking about that but I do think their initiative to be more green is now probably a really good decision. The fact that they were trying to use as much existing facilities and places as they could. The time and money spent on building a ton of new facilities only for them to be burned up or otherwise damaged would probably have impacted their ability to host even more severely not to mention if those new facilities hadn't been touched the costs of continuing to build them would really eat up other costs associated with such a large scale disaster as they've had.

An article from 3 days ago says that "None of the Olympic venues has been damaged by the still-burning fires that tore through Pacific Palisades on the city’s westside and Altadena".

The executive director of the Office of Major Events for LA stated "While our focus remains on healing and rebuilding, there is no reason to believe that the fires will adversely impact or delay preparations for the 2028 Olympic and Paralympic Games, which are already well underway." So hopefully that pans out to be true, but I think it's reasonable to think that something will be impacted as it could be an issue of diverting resources to the rebuilding or clean up efforts that will not help them maintain a steady pace of getting the city ready for the Olympics.

Even the long-term pinch the fires will put on housing will no doubt ripple out into the games. Rebuilding efforts will no doubt still be happening and some people will still be in a more interim type housing situation. Others will have settled into their new normal, with many of them probably unable to rebuild and those who didn't own the housing they lost having moved on to a different situation. Any way you slice it, it's unlikely the housing supply will be back up to the pre-fire numbers, which will mean a trickle down effect on housing stock overall of all types -- and increased pricing. It's likely quite a number of homes that have been destroyed may have been offered as rentals during the games, just as happens during the games every year around the world.

Like I said before, the games are by no means a top of the list priority in the situation. It does however show a small sliver of how the damage this has caused will reverberate for many years in many ways.