Construction Boom to Follow California Wildfires

In San Diego, where the ashes are still warm, some homeowners are already looking ahead to rebuilding, which will stimulate an economy slammed by the downturn in housing sales.

Contractors and developers could benefit, as the wildfires raging through Southern California have destroyed nearly 2,000 houses.

Khosrow Motamedi stood in the gray rubble where houses once stood on Lancashire Way, which runs along a hilltop in the Rancho Bernardo district of San Diego. He and two friends were sifting through the ashes with wire mesh, looking for his keepsakes.

"They recovered the location of a whole bunch of coin collections," he said.

A small pile of blackened coins — some of them fused together by the heat — rested at Motamedi's feet. The only other recognizable artifact is a Persian rug that miraculously did not burn.

The Iranian immigrant, an engineer, said he will "definitely" rebuild his home.

"I know what you're thinking," he said with a little laugh. "I don't really have much choice, because if I don't rebuild, I am looking at a huge loss. Everyone I have talked to is planning to rebuild. No one is planning to leave."

Local Economy to Rise with Rebuilding Effort

That could be a boon to developers, contractors, carpenters, plumbers — all kinds of workers are needed for rebuilding, said Alan Gin, who teaches economics at the University of San Diego. He publishes a newsletter on the county's economy.

"Due to the slump in the housing market, we're down about 5,000 jobs in the construction sector compared to the same time last year," Gin said.

But one-off rebuilding can be a problem for those whose homes were destroyed by the fires because of cost and insufficient insurance. Many homes in the area were built by developers capable of big economies of scale. They constructed hundreds of cookie-cutter homes at once. Some of the wildfire victims, however, are underinsured and may find that rebuilding a single home will cost more than their insurance will pay.

One solution is to bring in a single contractor to rebuild a number of homes, said Norm Miller, a real estate expert at the University of San Diego's School of Business Administration.

"If you can actually get a community to agree to work with one or two homebuilders and to come in and replace all of their homes, they could save 10 or 20 percent on the costs by negotiating as a group," Miller said. "And they can do the community improvements at the same time and the community landscaping at the same time."

Conversely, Miller adds, many small contractors will benefit from those who choose to go it on their own.

Homeowners May Decide the Strength of Area's Comeback

Motamedi's neighborhood is expected to meet next week to ponder such rebuilding approaches.

"That's basically going to be the topic: Do we want to use a single contractor for economy of scale, or do we want to rebuild individually?" he said.

After the wildfires of 2003, communities resorted to a number of those sorts of agreements.

People are going to need rentals over the next year or two, and San Diego's inventory of an estimated 20,000 unsold houses and condos — which led to sharply depressed prices — will fulfill their needs, provided they are away from wooded areas where wildfires could cut another path.

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