ANALYSIS-Rebuilding after fires a boon to San Diego region
30 Oct 2007 19:58:37 GMT Source: Reuters
By Jim Christie SAN FRANCISCO, Oct 30 (Reuters) - The San Diego region is poised for an economic boost next year as homeowners who lost houses in last week's dramatic wildfires there set about rebuilding, analysts said on Tuesday. While fires whipped by violent Santa Ana winds threatened communities across Southern California, they were especially intense in San Diego County, blackening more than 368,000 acres and destroying more than 1,500 homes. Initial estimates of insured losses in the county fall in a range of $1 billion to $2 billion as many homeowners return to properties to find only slabs, fireplaces and charred remains of their possessions. The fires will disrupt the county economy in the near term, but their thorough destruction points to a local building boom over the next year as burned-out residents rebuild homes with payments from insurers -- a process the region knows well after wildfires there in 2003 ago consumed 2,600 homes and the local economy rebounded in the following year. Alan Nevin, a San Diego economist who advises home builders, sees reconstruction starting as early as spring. "Assuming everybody gets their acts together immediately, it would take about six months," he said. "It's nothing starting tomorrow morning, but when it hits it will be significant." Only 4,000 new single-family homes will be built this year in San Diego County -- compared with a peak in new single-family home permits of 9,749 in 2002 -- so an additional 1,500 or more home projects would mark a big boost for local building, Nevin said. Alan Gin, an urban economist with the University of San Diego's Burnham-Moores Center for Real Estate, noted only 138 permits for new single-family homes were authorized in September for the entire county, California's third most populous county. "That's the lowest number since at least 1988," Gin said. "Construction has virtually dried up. ... During the boom years, there were months when he had more than 1,000 single-family homes authorized (monthly)." Construction workers will be grateful for additional work from last week's fires. More than 5,000 in the county lost jobs over the past year amid a nearly two-year local housing slump that has forced home builders to shelve new development plans."It's going to provide construction work for a lot of people," said John Robbins, a San Diego County resident who recently finished a term as chairman of the Mortgage Bankers Association. "It will be a bit of a boon." The building activity will not be the kind common to San Diego County. Last week's blazes hopscotched across neighborhoods, destroying some homes and leaving others unscathed rather than incinerating housing tracts, so publicly traded home builders will leave the work to local builders. "From a business perspective for us, we're probably not going to go rebuild houses, because they are scattered all over. It's not like it's a volume opportunity. So there are smaller builders that will build," KB Home <KBH.N> Chief Executive Jeffrey Mezger said in an interview on Monday. Nevin noted that some of San Diego County's most upscale communities, such as Rancho Bernardo and Rancho Santa Fe, bore the brunt of last week's fires, so homeowners there will likely rebuild with greatly improved custom designs. "They will be replaced with much better quality homes," Nevin said. "We're estimating the average replacement cost will be about $350 per square foot." By contrast, home building costs across San Diego County average about $200 per square foot, Gin said. (Additional reporting by Peter Henderson in Los Angeles)
