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Silver Contributor
DrivingSideways
Posts: 547
Registered: ‎03-03-2009
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Affect of Earthquake on Real Estate Prices?

I've read in the past that prices fall after a major earthquake.  Is this because earthquakes in LA have coincidentally occurred during RE downturns, is it mass migration after the quake, or is it because there is a lot of damaged inventory on the market?

 

I've often wondered about how PO'd I would be if I closed escrow and the next day an earthquake caused $200K damage to my new, 100yr old house.  I think we are definitely due for a biggie in LA, so I'm wondering if I should just shelve my shopping and wait for the Big One before diving in?  :smileywink:

 

Thoughts?

 

 

Super Contributor
Manq
Posts: 249
Registered: ‎04-14-2009
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Re: Affect of Earthquake on Real Estate Prices?

No telling when it would happen or if it would be significant enough to cause major damage.

 

I think what a quake does is it scares people out of town to head for areas where there are no quakes, plus the inventory becomes damaged which suppresses prices.

 

If your scenario comes true, you will be able to test your realtor on all his ho-hummery about how prices are rebounding and require that he sells your newly damaged house at a 20% premium. Ha!

 

The only thing I could tell you for sure is that The Governator would hold ANOTHER special election to try to raise taxes/revenue for the state since we would likely lose another hundred billion if a major quake hit.

Silver Contributor
DrivingSideways
Posts: 547
Registered: ‎03-03-2009

Re: Affect of Earthquake on Real Estate Prices?

Yea, the last thing this state (and country) needs is a major LA quake, but I feel like it's been so quiet for so long.  I'm not seriously letting the thought affect my purchase because, in life, nothing is predictable.

 

Super Contributor
TuningIn
Posts: 213
Registered: ‎03-29-2009
0

Re: Affect of Earthquake on Real Estate Prices?

I would think that it's a severe reduction in demand due to fear of the future. Quakes remind people of the realities of California's dangers, people lose their desire to own when the future is not so bright.

 

I would think that the amount of damaged inventory would increase prices. Since supply goes down.

Silver Contributor
DrivingSideways
Posts: 547
Registered: ‎03-03-2009
0

Re: Affect of Earthquake on Real Estate Prices?

Quakes tend to be pretty localized, a few areas get hit hard and others not so much.  Since our big fear is the San Andreas (even though there are damaging faults throughout the metro area), I would think the Riverside/SB/Palmdale/Lancaster corridor would be hit harder, although I don't think they have too much farther to fall at this point.
Gold Regular Contributor
amydevemma
Posts: 2,169
Registered: ‎04-23-2009
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Re: Affect of Earthquake on Real Estate Prices?

I haven't lived my entire life in SoCal... I moved here from Montana when I was 18 to attend college. The first year I was here, we were hit by the Northridge quake! I thought my goodness, does this happen all the time? And there was a mass exodus of people moving out of state! So yeah, I can see where that would affect home prices, since the supply would be more than the demand.
Super Contributor
Manq
Posts: 249
Registered: ‎04-14-2009
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Re: Affect of Earthquake on Real Estate Prices?

Palmdale and Lancaster are both like a "Detroit waiting to happen"

 

Crime out there is skyrocketing. I know a guy who bought out there last year because of affordability and says he can't sleep at night because of the police helicopters circling above.

 

I can see houses in Antelope Valley sagging beneath 100k by 2011.

 

Right now there is a huge selection of McMansions available for under 300k.

Super Contributor
TuningIn
Posts: 213
Registered: ‎03-29-2009

Re: Affect of Earthquake on Real Estate Prices?


Manq wrote:

 

The only thing I could tell you for sure is that The Governator would hold ANOTHER special election to try to raise taxes/revenue for the state since we would likely lose another hundred billion if a major quake hit.


Ahnohld would declare a state of emergency. He keeps pounding that button for everything: Fiscal condition, lack of budget, fires, rain, lack of rain, protests, lack of employment. Geez hits it so repeatedly hard and fast that you'd think that he'd mistook the state of emergency button for the "Fire" button on the Atari Centipede game.
Super Contributor
endlessfall
Posts: 320
Registered: ‎12-02-2008
0

Re: Affect of Earthquake on Real Estate Prices?

I've lived in so ca for 20 years. I think earthquakes average out once every decade. We just had one not more than 1 year ago, small one in Chino Hill.

 

I wouldn't worry so much about earthquakes as I do fires and crimes. Water becomes less and less each year and more and more criminals move into town.

Contributor
la-vida-reseda
Posts: 10
Registered: ‎03-22-2009
0

Re: Affect of Earthquake on Real Estate Prices?

You think we are due for a big one? DId you live through the Northdridge earthquake? THAT WAS THE BIG ONE. Myself and thousands of others were injured by that major earthquake and many people died.

 

So my advice to you is to quit wishing for a tragedy of thousands so you can save a few bucks on your real estate purchase. Think twice about this and think it through good.

 

The Northridge earthquake WAS the big one and don't let anyone tell you otherwise.