A land rush in Paradise? Investors gobble up ‘bargain’ properties in wake of Camp Fire
When the Camp Fire swept through Paradise last year, barely missing his home, Shaun Seidenglanz saw opportunity amid the devastation.
The Butte Valley businessman, who comes from a family of investors, bought eight residential lots in Paradise for a “fire sale” price of about $30,000 each. In most cases, the sellers had been burned out and moved away with no intention of returning. He plans to install prefab houses, help rebuild the town and make some money.
It’s risky, though.
Paradise, site of the worst wildfire in state history, is rebuilding slowly. But it’s also something of a ghost town. One parcel Seidenglanz bought, on a street called Heavenly Place, was the site of two deaths in the fire. He didn’t know until a neighbor told him after the purchase.
“If I’d known?” he said this week, thinking it over. “I probably would have (bought anyway). There is this downside. It’s sad. It is something now that is part of the community.”
It’s been one year since the Camp Fire roared across this ridge, killing 85 people and destroying 90 percent of the homes in Paradise. Town leaders are pushing to rebuild, but they have acknowledged they expect only about a quarter of the previous 27,000 residents to return in the coming decade or so.
A few thousand people currently live there in homes that weren’t burned, and another 510 property owners had pulled permits to rebuild as of the fire’s one-year anniversary in November.
But there is another trend on the hill: A number of burned out property owners are selling, often at low prices.
As of mid-November, 628 properties had sold since the fire, according to county data, and another 500 property owners had their parcels up for sale, according to real estate agents’ estimates.
Who’s buying? Some are neighbors who want to stay and are buying adjacent parcels to increase their lot sizes. Some are contractors and local investors like Seidenglanz who see an opportunity to rebuild and rent or sell. And some are outside investors who are taking a chance on cheap real estate in a picturesque corner of a state that lacks housing.
Paradise property sale prices vary
Many of the sale prices are bargains, at least by pre-fire standards, local real estate agents and appraisers in Butte County say.
Lots in Paradise that would have been worth $60,000 without a house before the fire are now selling for under $30,000. In Magalia, a modest community uphill from Paradise, properties where homes burned down have been selling recently for a median price of just $15,500, county assessor data show.
The cheapest sales price found in a Sacramento Bee review was just under $10,000. Andrew Manies, a real estate agent from Lodi, made that purchase almost on a whim while helping a colleague sell a family home. It’s a small lot in a senior 55-plus community. The seller was an older man who wanted out.
“I was excited to get it for the price,” Manies said. “There are good deals to be had.” Manies bought a second, larger property with a view for $60,000. He thinks he may have overpaid, but he likes the site and might build a retirement home on one of the two lots.
Manies is among those who believe the community will rebound even if it is likely to be more rural and less populated. “The more I have been up there, you know it is an amazing space, a unique location,” Manies said. “I think it is going to come back and it is going to do well.”
One year after the fire, the shock of the fire is still real on the ridge. The state just finished a year-long, multi-billion-dollar process of cleaning fire debris from more than 11,000 home sites, leaving each of them clean and empty.
Now, property owners face the question: Rebuild, sell or wait?
Potential buyers face their own questions. Will land values increase? How hard is it to rebuild on the ridge?
Post-fire issues persist. The drinking water system is only partially up and running after the discovery earlier this year of chemical contaminants in the system. And government officials say that as many as a half-million trees, many on private property, will need to be felled for safety reasons at a substantial cost. Septic systems will need to be rebuilt on some properties.
“It’s a frontier town up here now,” says property appraiser Brent Foster, a Butte County employee and longtime Paradise resident.
Property assessments drop after Camp Fire
Immediately after the fire, Butte County Tax Assessor Diane Brown eased the burden of the carrying costs for property owners by taking the value of the burned structures off the tax roles. Her office later lowered assessments on the underlying property.
Town Councilman and real estate agent Michael Zuccolillo says many former residents have been holding onto their property pending resolution of lawsuits against PG&E for causing the fire. PG&E recently agreed to pay wildfire victims there and from other Northern California fires $13.5 billion in reparations.
Former Magalia resident Bunny Keterman, who suffers post-traumatic stress disorder as a result of the Camp Fire, bought a home in Sacramento and does not plan to rebuild, but is holding onto her property. She loved life on the ridge, but her sense of safety is gone. Her land was reassessed at under $20,000, which lowered taxes enough to allow her to hold on to the property while watching what happens to real estate values.
Others, among them elderly residents, sold quickly. Mark Crawford’s mother, whose 2,400-square foot home off Clark Road was destroyed, sold her lot for $35,000 and moved to the Sacramento area. “It almost didn’t matter what the price was,” said Crawford, who helped his mom sell.
No houses on her cul-de-sac survived. “Mom got her insurance settlement. She has no desire to rebuild.”
Are Paradise and Magalia safe?
One question in the aftermath of the fire: What are the chances a devastating fire could hit again?
Manies, who bought the $10,000 lot, is among many who are betting Paradise is unlikely to experience a similar disaster in the future. New homes will meet modern building codes, he said, which make them less susceptible to fire. There will be fewer trees and fewer houses, and more open areas, meaning less dense fire fuel.
“My feeling is there is risk wherever you live,” Manies said. “If you are going to live anywhere in the foothills where wind collects and it is a dry space, it is probably going to burn. I don’t see Paradise as a greater risk. Right now it would potentially be a lower risk.”
Immediately after the fire, some local residents said they feared outside investment companies would swoop in, buy up properties and turn the hillside into an upscale area unaffordable to former residents. Some out-of-town investors like Manies have bought properties, but so far most buyers appear to be from the Butte County area, town councilman and real estate agent Zuccolillo and others said.
In fact, after peaking in August, property sales tailed off this fall. Prices of empty properties have dropped slightly since earlier in the year, county data show. Zuccolillo says that may be because potential buyers and sellers are calmer, more cautious and less emotional now than they were in the early months after the fire.
Getting building permits
Seidenglanz, who bought eight properties, said his plan was to start as early as next month rebuilding with less expensive prefabricated houses. But he says he’s learned that the housing manufacturer is months behind schedule, in part because of product demand after the multitude of wildfires that have hit the state in the last three years.
He’s hoping the simplicity of the prefab homes and his local knowledge will help with what has been a difficult permitting process for rebuilding. He’s visited City Hall, and said, “I’ve heard some horror stories, but I’ve also seen them expediting things. It depends on how well prepared your contractor is.”
The ridge isn’t full of real estate bargains though. Some of the few still-standing homes on the market have been snapped up this year at prices equal to or even higher than before the fire, as housing demand in Butte County continues to outstrip supply.
New home construction also appears to be costing owners a premium price, due to a lack of contractors in the area as well as new state building requirements. Real estate appraiser Brent Foster said he’s seen construction bids on houses of more than $300 per square foot – twice as expensive as pre-fire construction costs.
Foster, a real estate appraiser and Paradise resident whose house survived, said he’s considered buying properties. But he isn’t sure if it’s the right move. He said it takes research to determine whether a property will be easy to build on, or whether it has issues that will escalate costs.
“I am on the fence,” he said. “I don’t know if it will be a good investment or not. And I know a lot.”
County assessor Diane Brown says she senses that many people are not yet emotionally ready to make the decision to sell or to rebuild.
“It’s still early in this disaster,” she said. “People are still shell-shocked.”
This story was originally published December 13, 2019 at 5:00 AM with the headline "A land rush in Paradise? Investors gobble up ‘bargain’ properties in wake of Camp Fire."