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Ask A Realtor: How Will The Waldo Canyon Fire Affect The Real Estate Market?

A question for the resident realtor (Carrie’s husband, Jeremy) from Daphne:

With the large numbers of homes lost in the Waldo Canyon Fire, is the real estate market going to be affected at all? And if so, in what way?

Jeremy’s response:

I don’t expect any major medium/long term effects on the overall Springs area real estate market from the Waldo Canyon fire.  However, there are numerous short term effects and perhaps a couple caveats I should mention:

1. Right now, it is impossible to get new insurance policies issued for many areas.  This means that anything currently under contract is now on hold until the new buyer can secure homeowner’s insurance prior to closing.  (You can’t get a mortgage without insurance.)  I’m not an expert on insurance, but my sources indicated this issue should take care of itself over the coming weeks.

2. Until the affected neighborhoods are rebuilt, values in those immediate neighborhoods will likely be affected for the “lucky” ones whose homes survived.  Depending on how quickly we see things rebuild, this effect will probably last between 6 months and a couple years.

3. Homes backing directly to the charred landscape will likely not bring the same type of premium for the next few years.

4. We might see a slight increase in demand in the $200-400k price range as some homeowners opt to buy another home instead of rebuilding.  However, I spoke with Dan Lewis at State Farm after the fire, and his initial impression after talking to many of his clients is that they would be rebuilding – not moving.  If he’s correct, this impact will be nominal.  For the sake of discussion, let’s assume that only 25% of the 346 homeowners move instead of rebuilding, that’s 87 additional sales for 2012.  That isn’t enough to dramatically impact the market overall, but it would still be good news for the market in select price ranges and neighborhoods.

5. In the immediate future, we’ll likely see a shortage of rentals.  Considering that we already have a very healthy rental market, the additional 346 families seeking a 6-12 month rental right now will likely make rentals even more difficult to come by.

6. This is great news for the construction industry.  Home builders and subcontractors will have hundreds of homes to build with checks from the insurance companies.

In summary, I’d say that apart from homes in the immediate neighborhood of the destruction, any impact will be very nominal.  If anything, it could be a net benefit to the market in some respects.

If you were personally affected by the fire and have any questions about your specific situation, please give me a call (719-231-9043).  I’d love to help in any way I can.

Jeremy Isaac is a Colorado Springs Realtor, but you probably know him better as Carrie’s husband.  If you’ve got a question to ask, shoot him an email at jeremy@thecircagroup.com.

You can search the Colorado Springs MLS on Jeremy’s website, with no registration required to view homes, prices, addresses, or any other information.  If you’re looking to sell your home, be sure to view his marketing portfolio and see how the use of HDR photography, professional video, and more will help your home quickly sell for top dollar!

7 Comments
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Comments

  1. Jeremy,

    Not sure if you can answer this, but we had a rental property that was lost in the fire. We are working with our insurance company to figure out our options etc. My question is, now that the house is gone and once we get everything settled with our insurance company, do we still need insurance since there are no home/belongings on the property? We do intend to rebuild, so maybe we need insurance during that phase anyways?

    • Sharon,

      I suppose theoretically there may be a *brief* window that you don’t *need* insurance but if you have a mortgage on the home the mortgage company won’t allow you to drop the coverage. And, yes, you’ll need some sort of coverage during the rebuilding phase anyway. Also, your insurance may also cover personal injury claims should someone trespass and injure themselves. (No, it shouldn’t be your fault, but I’d still want the insurance company to be the one hiring an attorney :)

  2. Valerie says:

    I work in the flooring industry and we are seeing some people getting pricing to replace floors in damaged homes…we are also seeing people put offers on homes further east saying they will deal with the destroyed house/property down the road when it all works its self out. Of course lots are renting in the short term as well. I think its a mixed boat on how homeowners are going to handle it.

  3. It has always been my impression that most insurance companies will not just cut the owners a check for a lost house but will pay only to rebuild. Then of course the owners could sell it if they wanted to. I’ll be curious to see if that is the case and how many empty lots there are a year from now. If I’m correct since people still owe the mortgage on a destroyed home they have to rebuild and sell to pay it off or rebuild and stay and continue to pay the mortgage.

    I also heard in one of the press conference that some rezoning is not out of the question. I don’t how they can do that when people own the land. Maybe they meant new building codes instead. It will be very interesting to watch.

    • Audrey,

      I’m not an expert on insurance claims when the home has been completely destroyed which is why I called a friend who is a State Farm insurance agent to get the scoop. He stated that his company would offer to pay the owner market value with the owner deeding the property over to State Farm. Obviously, people need to check with their own insurance agent to get the details in their particular situation because every policy is different.

  4. Elizabeth says:

    What about homes being sold up in the mountains, like Lake George. Will the fear of forest fires deter buyers from buying high up in the mountains? We are currently trying to sell and been under two evacuations because of the fires. How much did the fires affect our chances of selling?

    • Elizabeth,

      As long as your immediate neighborhood wasn’t hit, I don’t think it will make a big difference once the fires are all out. People have a short memory :)

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