Real Estate Market Update: Natural Disaster – Fire Sale

Real Estate Market Update: Natural Disaster - Fire Sale


Fire sales, blowout sales, and door crashers are a few sales slogans that marketers use to get the attention of the consumer. However, these terms have been prevalent in the world of real estate over the last number of months too. Not for the hot real estate market we read and hear about, but rather because of the devastation of properties and homes. The fires in the wine regions of Napa Valley, Sonoma Valley, and even here in the interior of BC, have been devastating and will have a huge impact on property values moving forward. Hurricane Irma and its incredible wind speed of 295 km/h was an absolute blowout as it relentlessly crashed down millions of doors and became the fourth most costly hurricane on record with an estimated $62 billion dollars in damage.

What does this mean for investors even if they are not directly impacted by the catastrophic events? It means more expenses. Insurance is the obvious expense that would become more expensive. What happens around the world in insurance trends has a ripple effect on all insurance premiums. What about building materials? Does a natural disaster impact material costs? Hurricane Irma and the raging fires of the wine counties combined could total a $100 billion dollar loss. Imagine the desperate need and shortage of supplies to rebuild approximately 2 million homes (estimating the rebuild per home of $500,000). That’s 2 million front doors, 2-6 million bath tubs, 2-4 million fridges, stoves, washers, dryers, and so on. The impact is unbelievable in the marketplace. Every building item and material related to the construction of a home will be subject to increases because of the supply and demand caused by these two natural disasters alone.

How is labour affected? I have recently heard that labour costs in the construction industry are going up by 1-2% per month in the Fraser Valley because of the demand for quality tradespeople.  The demand after a natural disaster is significantly more intense. In addition, where do you even find enough able-bodied workers after events like these? In fact, many of the qualified workers pick up, leave, and move to other places where they have accommodations for their family and loved ones. Labour certainly is impacted in a big way.

What happens to property values after a natural disaster? It is far too early to understand what the values will be from Irma and the fires of California and BC. However, we can look to the horrible Fort McMurray fire of May 2016 and the impact it has had on values. Interestingly, they have had more sales volume but home values are down approximately 20% as of February 2017. This is opposite from most real estate markets; increased sales volume generally pushes prices higher but that’s not the case in Fort McMurray. After reading a few articles on the Fort McMurray fire, I believe the fire had a huge physiological effect on the residents. For some it was the catalyst for them to leave, an excuse to finally make the move and start a new life. While others were emotionally beaten down and are finding it hard to cope. There are reports of more families still in need of food hampers as well as reports of more alcohol and drug abuse. In addition, as one resident said, “It’s like a dark cloud hangs over everyone’s head, it’s hard to explain. It sounds like a community on life support.”

Natural disasters bring property, financial, and emotional destruction as well as extreme hardship, as we have seen in Fort McMurray. The question is, does this hold true for all disasters? Does the size of the disaster proportionately affect the area or community? And, what are the opportunities? Opportunities, as a real estate investor, but more importantly as a fellow human being? People are resilient; it is the hope inside us all that we believe better times are just around the corner. The healing and recovery is always easier when others come along to stand side by side. Many times, we think of financial support, but I believe it is the emotional support that is the true difference maker. In the case of Fort McMurray, better times are more prevalent and things are improving month by month. As a caring person and a real estate investor, the opportunity of being involved in rebuilding the community can be very rewarding. Bringing aid to our fellow people is inspiring and empowering and when the intention is pure, the financial opportunity often follows for the investor. Opportunities are all around us and the opportunities seem to find those of us that are the most deserving of them.

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Randy Dyck
Personal Real Estate Corporation
604-807-4366 or

STR (Sell Through Rate) Formula = Sales ÷ Active Listings + Failed Listings + Sales

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