Home values after the ashes

Times Staff Writers

A Century 21 for-sale sign stands like a sentry before the charred skeleton of a hilltop house, which until last Sunday Harriett and Bob Guttman had called home for two decades.

The sign was left untouched by the capricious wildfire that engulfed the couple's three-bedroom north Claremont home, which they had listed a month ago for $750,000.

"All the homes around me are perfect and whole," said the Rev. Harriett Guttman, a police chaplain. "Mine [is] leveled."

The fires, which have destroyed more than 2,800 homes and caused more than an estimated $2 billion in losses in Los Angeles, San Bernardino, Ventura and San Diego counties, will have the short-term effect of disrupting plans of some home sellers and buyers. In the long run, however, even homeowners unscathed by the fires will have to cope with changes in their communities because of the disaster.

As tragic and costly as the property losses have been, real estate experts expect the regional effect on sales to be temporary, "a small blip on the radar," because of Southern California's booming housing market, said Leslie Appleton-Young, chief economist for the California Assn. of Realtors.

Home prices are likely to remain strong because of low interest rates and continuing demand. Communities in San Bernardino and Riverside counties and those around Simi Valley have been among the fastest-growing suburbs in the state over the last decade.

"We have a housing shortage in California," Appleton-Young added. "Some fire victims will leave, but 10 more people will take their place."

The pace of recovery for neighborhoods and communities, however, may take longer, depending on the scope of destruction, the resources and the political will. Already some stores and restaurants have reopened for business in fire-ravaged San Diego.

Based on past disasters, recovery could take at least four years, the time it took Oakland to rebuild after a 1991 fire that killed 25, destroyed about 3,000 homes and caused $1.7 billion in damage. Malibu's recovery timeline was about the same after the 1993 fire that also roared through Calabasas and Topanga Canyon, killing three, burning 268 homes and causing $219 million in damages.

Within four years, Laguna Beach was on the mend from 1993 wildfires that destroyed nearly 350 homes in the area and caused damages estimated at $528 million. In the 1994 Northridge earthquake, 57 people died, 200,000 homes and apartments were destroyed and 114,000 other buildings were damaged, destroyed or left uninhabitable. Nine years later, the widespread damage area, from Sylmar to Santa Monica to South and Central L.A., was nearly fully recovered at a cost of more than $20 billion.

Typically, victims of disasters and would-be home buyers wait a few weeks to six months before making decisions about rebuilding and buying on devastated terrain, real estate experts say.

The Guttmans, who are about to break ground on a new home in Palm Desert, have tentatively decided to clean up and sell their 15,546-square-foot view lot so "someone else can build their dream house," said Harriett Guttman, who was ministering to homeless fire victims when she got news of the loss of her own home. Their agent, Yolanda Maldonado, believes the lot can sell for $350,000 because it is on a street where other homes are intact.

In the case of the Oakland hills, rebuilding began about six months after the fires because the city streamlined the building-permit process for fire victims, said Larry Rosenthal, executive director of the UC Berkeley Program on Housing and Urban Policy. Eighteen months after the disaster, huge new housing developments were well underway.

Although the rapid reconstruction helped homeowners quickly lay down roots and created a job bonanza for construction workers, sound planning principles were sacrificed.

"It's chaotic there," Rosenthal said. "Drive through the streets and you'll see textbook examples of homes that couldn't have been built prior to the fire."

After Malibu's fires

Malibu had a similar experience in which its goodwill toward fire victims resulted in unintended consequences. The city waived building-permit fees and offered "compassion allowances" to fire victims, giving 10% more floor space for their new homes.

Malibu City Atty. Christi Hogin said that some owners whose homes were not damaged were upset because they felt crowded by the new, larger homes of fire victims, which also blocked their views.

Creating more ill-will among some longtime residents was the fact that they could not take advantage of the relaxed regulations while newcomers who bought fire-ravaged lots could.

In Northridge, some projects, such as new buildings on the Cal State Northridge campus, were completed just last year. The recovery ordeal was prolonged, in part, by a recession that had hit the Valley especially hard and had already sent housing prices plummeting in Los Angeles.

Rebuilding bogged down because several insurance companies mishandled homeowners' claims, leaving an estimated 100,000 in limbo until a state law passed in 2000 allowed them to refile through January 2002.

There were other financing problems and political setbacks. In June 1994, California voters gave the thumbs down to an earthquake recovery bond measure that would have paid for the state's share of earthquake repairs. The defeat delayed the rehabilitation of scores of abandoned apartment buildings, businesses and condominiums. That sent the city housing officials scrambling for a new source of funds.

Bureaucratic red tape, logistical snafus and higher-than-expected costs also held up work on many damaged public buildings, including schools, hospitals and police stations. But by 1998, the residential housing market, rental occupancy rates, construction permits and other economic indicators were solidly on the rise, according to a report for the San Fernando Valley Economic Research Center by Shirley Svorny, an economics professor at Cal State Northridge.

The influx of billions of dollars of federal aid and insurance payouts led to residential and neighborhood improvements. Van Gogh Street School in Granada Hills became a high-tech campus. Modern apartments replaced condemned units in Sherman Oaks. A new library, student services center, academic halls and parking structures were built at Cal State Northridge.

The spending helped lift the region out of the recession. "It was really a stimulus to an economy that was in pretty bad shape," said Cal State Northridge economics professor Daniel Blake, director of the San Fernando Valley Economic Research Center.

The Northridge, Malibu and Oakland experiences provide helpful lessons for Southern California rebuilding. But the bigger picture may be lost for now for real estate agents, home buyers and sellers who are focused on their own properties.

The fires are slowing some deals. "We have a client who is trying to get loan approval," Dennis Findly, an agent specializing in the Inland Empire, said last week. But the client couldn't reach anyone because the lender's two offices are in San Bernardino and San Diego counties, the two hardest hit by the blazes.

Regarding another transaction, Findly said, "We had to do a home inspection. We get on the phone with the agent. She was really irritated. Finally, she said, 'My home is in danger of burning.' "

Flight attendant Jeffrey Harper, who signed a contract a week ago to sell his A-frame cabin in Running Springs to a firefighter, is unsure about the status of the sale.

His broker, Lynne B. Wilson, who has offices in Lake Arrowhead and Beverly Hills, has had two buyers cancel purchases in the Crestline area out of 40 existing escrows.

Another agent, Danielle Parks, who specializes in the Rancho Cucamonga area, has had no cancellations. She got a new listing Monday and is "getting ready to close an escrow at a home on the edge of the fires."

That four-bedroom, three-bath home is "one house away from where the fire came down the hill" in Alta Loma, according to the owner, Don LoPiccolo.

But he wasn't worried about the $500,000 sale falling out of escrow. "The lady who bought the house lives right behind us. She's been there for a long time, and she knew the area."

But some home shoppers are having second thoughts. After selling their home in Northridge, Ricki Stanley and Jack Caverley had been renting a townhome recently in an expensive hillside community in the northwest corner of the San Fernando Valley, where they had planned to buy before the fires.

"We're not interested now," Stanley said.

As the ashes settle, the Guttmans are staying with one of their two daughters, both of whom live in Claremont. When the couple's desert home is completed, they plan to return often to the city they've called home for 38 years.

"We have deep roots in the community," she said. "We'll be back."

Still, even after a sense of community is restored -- homes rebuilt, landscaping in place and businesses reopened -- the intangible features, such as neighborhood familiarity and a feeling of safety, often are more elusive.

"In reality, there are some elements of loss that become a permanent feature of the community," said Berkeley's Rosenthal. "True cohesion is not recovered; many people move away and don't rebuild."

Even after weathering the worst of fires and mudslides, Malibu residents are ever on guard for the next catastrophe. "It all comes together and all falls apart," said Hogin, the beach community's city attorney. "We're always recovering but always preparing for the next."

Times staff writers Sharon Bernstein, Andrew Blankstein and Patricia Ward Biederman contributed to this report.

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