California’s Real Estate Just Changed FOREVER (Everything You Must Know)

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[00:00:52] Real Estate in California is going to crash next year due to these fires. Yep. Yeah. Unfortunately, this is the truth, guys. So, um, you know, as devastating as all this is, and it is, uh, it's a real estate play as well, right? Negatively, positively, there's going to be tons of stuff that happens as a result around this. So, so it's worth diving in and kind of seeing how this is going to play out.

[00:01:20] And one of the interesting things is having been in the business for 30 years, I've had this kind of, we've had issues like this. We've had fires, we've had hurricanes, we've had tornadoes, we've had hail, we've had lots of floods. So there's all these things that, um, we've dealt with then.

[00:01:40] And I'll tell you what, we're in for some, we're in for some interesting things that are going to happen here with, because the first thing that's going to happen is obviously people are going to migrate. Great. We all know that you're not going to, whatever, if your home was burned, which, um, I'm really sorry, by the way, all this, uh, it could be three to five years before you're back in it. Right. And before we get to all of that, let's just talk about, you know, this just happened in Florida.

[00:02:08] Um, probably that was in March or April when that hurricane hit and we're just now seeing all of the real estate go up, uh, for sale in Florida and Florida's having parts of Florida are having a lot of dips in their real estate pricing. So we're not expecting to see this like tomorrow or even next month, but over the next few months, you're going to see a lot of listings in California. And Jerry, if you can play clip one, this is a broker in the state and the calls that he's already getting right now.

[00:02:38] And I thought it was really interesting. Yep. Uh, my phone over the past 48 hours has been ringing nonstop with different types of calls. First, you have the call for immediate occupancy and a turnkey property where somebody can put their family and then figure out where they're going to go. And then you have the next call for the long-term leases for the two years, maybe even three years, because that's how long it's going to take to build these houses.

[00:03:03] And then you have the other call, which is the people who are not going to go back to places like the Palisades. It's going to take too long. You have neighborhoods that are going to be built. Are they going to want to finish their house and then sit there amongst construction for the next few years with their children in the house? It's not going to happen. So they're actually going to end up selling the dirt and actually looking to buy houses now.

[00:03:26] So to give you some sort of color of what's going on, we typically at the Altman Brothers, we list about $150 million worth of real estate a month. In the past 48 hours, we are listing $150 million worth of real estate. That's how much action we're seeing in the L.A. market. Now, on the other side of the coin, you have, of course, the landlords, right?

[00:03:47] They're going to put their houses on the market even if they didn't want to, and they're going to charge a premium, which is an unfortunate thing because they think that the insurance companies are going to be paying for this. And then, of course, you have people that are putting houses on their market for sale in places like Brentwood, Santa Monica, Bel Air, Beverly Hills, because it's close enough to where their regular life used to be. So that's where they're looking to purchase houses.

[00:04:13] And one thing that I want to make note of from this video is when he's saying he has $150 million worth of real estate for sale in the last 48 hours, he's not talking about the houses that are gone. Those people aren't putting their house up for sale, the ones that just burned down. They can't. They have to deal with insurance and everything else. These are people that see what's coming, and they want to get out. Right. Yeah. These are the ones that were not affected. Well, they were affected, but they're the ones that are saleable. Let's just put it that way.

[00:04:44] Obviously, you can't really sell a home until it's rebuilt. Right. So now, having been through this, let's start off with the insurance piece because I think this is a really, really important piece. Right now, everybody's in shock, and they're trying to figure out where they want to live. And I think they're wrapping their heads around on, one, do they want to go back? Two, if they go back, where? And that could be California.

[00:05:13] That could be other states, depending on their personal situations. But one thing is for sure, a lot of people are choosing not to go back, and will choose not to go back. Same thing happened in Florida. Same thing happened with Hurricane Katrina. Same thing happened with Hurricane Ike, which I personally went through, which I'll talk a lot about. You know, you start to see displacement. Like there are people that just decide not to go back to the French Quarter, for example, down in New Orleans.

[00:05:43] Now, eventually, it all kind of moved back. Same thing in Hawaii with those fires. So there's a process here. And I would encourage everybody to, the first thing that's going to happen is they're going to start to dig into their policy, if they have one. Right? So the policy is huge, if they had one. Hopefully you do. And, I mean, just like when you get in a car accident, the insurance adjuster is looking for a speedy claim to be paid.

[00:06:13] You're actually looking for that, too. But that doesn't always benefit you, right? So the policy is going to be really, really, really important. What's included in that policy? Because this is actually when you really find out how good is your policy. And, you know, there's all kinds of stuff. Who's going to pay for housing until these people are back and where?

[00:06:39] And so kind of to this guy's point, insurance has a number typically in mind. And they're going to negotiate just like they do with everything else, you know. And it's going to be very, very, very interesting. There's a lag for sure. But I think getting an adjuster out there to try to figure out the extent. So as you guys know, you probably heard the term replacement cost.

[00:07:05] So replacement costs today are significantly more than the 70s, the 80s, the 90s, you know, just because of the new code regulations and costs of things, inflation, all that. So replacement costs, depending on what your policy is, that could potentially get challenged. It got so bad for us. We went through Hurricane Ike in Houston.

[00:07:34] I lost 150 units in 300 plus unit property. And it took us four years. We fought with the insurance company and we settled on the steps of the Texas Supreme Court. And we spent $700,000 in legal fees. And it's just a mess because the first thing I had to do was clean up the property just for people to move back. Right. And that was, you know, on a multifamily building.

[00:08:01] But, you know, a lot of these are, I mean, there are some multifamily, but a lot of these are single family. Yeah, there's condos, there's multifamily, there's all kinds. Right, right. Retail. And one of the bigger things in California is the insurance piece. And we talked about this in Florida as well, where insurance has gotten so expensive that they have, you know, people weren't carrying policies or insurance companies weren't covering fire. Just like how we saw in Florida when they weren't covering hurricane damage. Right. So these are huge expenses to people.

[00:08:29] And if you weren't covered for that, obviously, you know, you're not going to get any money for the property and you're going to basically just have to sell the dirt. And I thought it was interesting because California, you know, had issued some new mandates talking about, you know, how they wanted the insurance to be covered and allocation. And Jerry, if you could play clip three for us, you know, because California thought it would be a good idea to make insurance companies.

[00:08:59] This is right before the fire. Right before the fire. Like a week ago, they announced they want insurance companies to cover everybody equally under equal rates. And this is going to contribute to the exodus out of California. Next story I want to go through is California. New California regulation requires insurance companies to offer coverage in high risk areas. This is very problematic, guys. It sounds like a noble thing the state is doing. Again, they're making a mistake that's going to end up hurting citizens. Let me read this to you.

[00:09:27] California Insurance Commissioner Ricardo Lara announced a new regulation requiring insurers to offer coverage in wildfire prone areas, mandating companies right policies covering 85 percent of their statewide market share in high risk regions with five percent increments every two years. Laura called it a historic moment for California, stating Californians deserve a reliable insurance market that doesn't treat retreat. From communities most vulnerable to wildfires and climate change.

[00:09:55] So this all came out, you know, about a week ago. And it's interesting because now, you know, basically what it does is it makes insurance companies have to either cover everybody in the state or leave. And especially after these fires, if they were even considering saying they're going to leave. So, you know, what you're going to have happen is what happened in Florida, where one insurance company insures the high risk areas and they can kind of charge what they want to charge.

[00:10:22] And that's and that's going to be spread over the whole state, though, because you're seeing people in Florida like Orlando that's not at a hurricane risk still paying massively higher premiums than they were before. Right. So as you guys know, our insurance premiums went up over 35 percent. Our CIO, Charlie, negotiated this. And by the way, we negotiated the heck out of this. And it was still in the millions higher than the prior year. And what they what they do is they subsidized.

[00:10:51] Back then they said, oh, well, it was the Hawaii fire and it was the Florida hurricanes. And, you know, if you have an insurance company that does business in Arizona, also does business in Hawaii, also does business in Florida, also does business in California. It's one company taking these losses on. They spread it over the policyholders for the others. Now, I'm not saying that's right or wrong.

[00:11:17] I'm just telling you that insurance costs have already jumped significantly in the last year and a half, two years from what we're typically used to. And as as at the same time that's happening, they slowly take away different kinds of coverages that you may or may not even realize. So Johnny on YouTube said insurance is ruining everyone. The casino has better odds on payouts. So I thought that was kind of funny.

[00:11:44] But but yeah, and because of, you know, when you start to jack the insurance cost, you know, it's start it. It doesn't make sense sometimes to own anymore and it might not make sense to even rebuild for landlords. You know, the insurance cost is squeezing them out. And then even for homeowners, it just gets expensive and they're going to look at other options. So you're going to see people migrating out of California.

[00:12:09] And back in 2021, this happened, you know, even with the mild fires they had, the moderate fires they had there. Scottsdale real estate. A lot of people moved to Paradise Valley in Scottsdale. A lot of people are going to move to the Vegas market. A lot of people are going to move to the Arizona market. A lot of people are going to the Utah market because what they're not going to do is probably go to Florida because they're having the same issues. They're going to want similar weather with less problems and cheaper insurance. Yeah.

[00:12:36] And I, you know, at our company, as you can imagine, with 10,000 apartments, we always have fires going on. So, like, I mean, believe it or not, it's more normal than you think. So they start with a kitchen fire, let's say, but sometimes it can spread. And, you know, I was talking to my partner this morning, Ross, and I asked him, how long did it take for this property and this property? He's like, each one takes easily 18 months.

[00:13:03] That's, you know, of course when the whole rest of the property is occupied. So that's just from the time the fire to the time we get the certificate of occupancy, it's actually fixed. So, you know, of course, you just start or you're a new security program. You can demonstrate, you know, your security program is important. You can demonstrate and trust in your company.

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[00:13:47] Über 9000 globale Unternehmen wie Atlassian, Flow Health und Quora nutzen Vanta bereits, um Risiken zu managen und Sicherheit in Echtzeit nachzuweisen. Erhalten Sie ein spezielles Angebot von 1000 Dollar Rabatt unter venta.com slash horen. That's not considering a disaster. One of the things Ross said to me, he said, you know, I said, what, because he's a contractor. I said, when we build our own stuff, I go, what are you most concerned about?

[00:14:15] He said, the availability of the contractors. Right. You go, like, you know, that's something like you think about with all of that, the rebuild. Right. So we saw this with with Hurricane Katrina. We saw this with Hurricane Ike. We saw this with the hurricanes in Florida. And obviously, we've now seen this within in Hawaii. There's only so many contractors that can rebuild. Right. Well, and they like to jack up those rates, too, you know, because they can. Right.

[00:14:45] They're in high demand. They should. They can. You know, that's fair. And you're going to see that. And also supplies like also these building supplies. I mean, this is a lot of homes. I mean, this is a lot of structures, way more than in Hawaii. And so you're going to have issues with the supply market as well. Without a doubt. So if you've got something under construction somewhere, let's say, and you're expecting

[00:15:08] appliances or framing or roofing tile or concrete or whatever it is, just like what has happened before, you're going to see a redirect. Right. But how do you. OK, so the broker at the beginning, I thought he was interesting. And I think he's right. You know, even if you get your home rebuilt or even if your home fortunately wasn't burned, you're going to have so much construction for the next three to five years around you.

[00:15:33] And that is the infrastructure to your kids school, your church, your grocery store. It's not just your house either. What percentage of people do you think are even going to want to do with the rebuild process? Because I don't think that I would. I would. Well, you have to kind of go through it because what do you own? You own a piece of land with potentially no structure. So it's not really worth anything. I mean, if you have a mortgage on it, which I'm assuming you do, because especially if you

[00:16:01] have a mortgage, then the lender requires you to have insurance because the mortgage is secured by the property. If there's no more, it's just land. And so that's why. And so, you know, so that's kind of why the state did that thing that Patrick, that David was talking about. Right. Um, you know, I get that because the cost of insurance was so much that people were, you know, the, the, the word is naked. They go naked with no insurance, right? They're uninsured.

[00:16:28] Now this happened to friends of ours in Florida on the last, um, um, disaster they had down there. Remember they sent in us photos. Um, their houses were full of sand and, um, you know, it had been pounded. So, um, but what's going to happen is, uh, these people are going to have to, they're going to have to negotiate with the adjuster, which by the way, who does the adjuster work for? The insurance company. Correct.

[00:17:01] Right. So, um, you know, it's a, the, the, the, the, the, the, the, the, the, the, the, the cost of build. Yeah. Yeah.

[00:17:28] There's only one, there's only one person standing. So, um, that's a fact, you know, I, we were talking about this the other day about replacement costs. Yeah. Replacement costs have went up 31% since 2019. And most people haven't adjusted their policy accordingly, especially with insurance rates going up. Right. So, so this is when all those coverages all come, um, you know, this is again, when, um, you know, when you pull out the policy and see what it covers, right?

[00:17:58] Now, are you allowed to rebuild a smaller home or do you have to rebuild what was? So that's an interesting question. So the next thing that's going to happen, once you get through all that, um, then you're going to have the permitting process. And, and one of the things that we learned from, from so many of these is the codes have changed so much in the last 10, 20, 30 years. So what are those? Those are, uh, the, um, American Disabilities Act. That's the, that's a big one.

[00:18:27] Uh, ADA wheelchair accessibility, disability. That's a huge one. So what does that mean? That, that means that there's a bunch of regulations around that. Um, fire sprinklers, uh, uh, ironically. Um, are another one. So all new homes generally require fire sprinkling. So if you bought something in the two thousands, you probably have it. But prior to that, there's a long period of time where, or didn't exist.

[00:18:52] Um, you've got other things like firewalls, which is ironic, but the firewalls, it would require extra construction and more different kinds of drywall and stuff like that. And then you got, uh, wiring and there's just a, there's a whole bunch of code things, requirements that have changed over the years that, so that's another thing that hit us at our property in Houston. Imagine, is that, imagine ours was completely gone. So we had to tear it down.

[00:19:19] Then you have, we had to go to the city and get them to approve a new plan with all the new codes. Then we had to go bid it out just like you do a new build. Um, and, um, and you get a hard construction costs and then you go submit that to, uh, in this particular case, the insurance company, and then you have to build it. And so the question is, is if you, if you negotiate a payout today for a house, um, you know, what is it?

[00:19:49] It's going to be for a rebuild. And, um, so what are the costs of framing? What are the costs of construction? What are the costs of roof tiles in two or three years from now? Well, and right. And that's what Andrew is saying too, on YouTube is he's saying those prices are going to also explode because replacement costs is on today's value. But you know, in California now with all these homes, today's value is not tomorrow's value to replace this stuff. But, but even if you did say, say, you know, you, your replacement costs is 7 million.

[00:20:17] So now you have to buy a seven, build a $7 million home instead of a $10 million home, um, to try to stay in budget. It could be smaller, I think, but at the same time, it also can't, you, you owe some of it because the bank's still not going to lend on a hundred percent of the value too. I mean, there's complications with the mortgage because it's a different, if it's not the same home that you're building. Well, the mortgage is still in place. Right. But I'm just saying, if you decided you're going to build a smaller, cheaper home and

[00:20:44] now you have a mortgage that's worth more than this smaller, cheaper home that you just rebuilt, that's going to be a problem too. She thinks too much. It is going to be a problem. I used to be in banking. This is above my pay grade. I don't really know. Like my head's getting, my head's hurting. What happens? I don't know the answer to that, but, uh, you know, what happens if your policy is capped out, right? I think that's what you're saying. Yeah. Um, and that's a fair question. And especially as you size it up to the mortgage.

[00:21:12] Well, and I wanted to play this clip because the other thing you have in California, which you don't have in Florida. So anything that's happening in Florida is usually going to happen faster than in California because California is just more bureaucratic and you have something called the California Coastal Commission, which they hate building anywhere around the country. Oh, and the Hillside Commission. Both. Right. I know like the one thing they want is they do not want real estate. Yeah. They, they don't like building. So Jerry, if you could play clip four for me, this is Adam Carolla.

[00:21:42] He's always. I love him. He has a good take. Uh, rebuilding in Malibu Palisades at Santa Monica requires permits, lots of permits, and you're going to have to deal with the Coastal Commission and the Coastal Commission is not friendly and they don't expedite anything. Um, Suzanne Summers, the late, great Suzanne Summers and her husband, Alan Hamill had a house burned

[00:22:07] down in Malibu years ago, tried to rebuild, couldn't deal with the Coastal Commission for seven years. They had to deal with permitting and the Coastal Commission and ended up moving to Palm Springs. If people cannot rebuild their home in a timely fashion or gets regulated to the point where it just becomes impractical or undoable, you're going to see a lot of angry campers, which is what happened to Bill Maher. Bill Maher. Okay.

[00:22:36] But I, but that's interesting because it's true. It's going to take a lot of time. And what he says later in that clip is also interesting, which California is also dealing with a homelessness crisis as a lot of the, you know, country is. And if they don't keep encampments and stuff from going up in those areas, because those encampments are going to go up faster than people are going to get permits to rebuild. Yeah. And that's also going to be a problem. It's for sure. So it's going to be a migration for sure.

[00:23:05] Like these people, we don't know the final number of what it's going to be. It's still not fully contained. So I just heard that they evacuated the areas around the Hollywood sign this morning. So, you know, this is not over even. And, you know, the reality is, is are you even going to stay put? Right. And if you're not, where are you going to go? Well, because there's no place to go. You have to go rent somewhere or buy somewhere.

[00:23:32] And how many people have the wherewithal to go actually physically go buy a house right now while one is being repaired and, you know, rebuilt, I should say? And, you know, not not a lot of people. Well, and that's the thing. So people are asking about this online as they're saying, you know, can people just foreclose on these properties if it's not worth the dirt that it's on, you know, and you don't have the money to rebuild it. But and I don't know, you might be able to just walk away. It depends on how big the loan was and different things.

[00:24:00] But you're not going to get another mortgage. So you're not going to be able to just walk away from one and then just go get another one, you know. So if you did that. It's the bank's problem. Yeah. If you if you put it on the bank, it then becomes your problem to an extent because you can't just go buy a house somewhere else. Right. Right. That's that. Yeah. So I guess you got away that individually. We saw that in 2008. A lot of people walked away from their homes and they got stung a bit. And, you know, there were there.

[00:24:30] So you're not going to be able to do it. So you're not going to be able to do it.

[00:25:20] There are things that happen as a result of that. There's processional effects from doing that. But one thing that's interesting is the neighborhoods around where the fire has burned could go up in value. So, you know, like depending on if it actually catches fire. But right now, like the Bel Air area, the Brentwood area, those areas could go up in value because these people need to buy homes. So as soon as this fires out and they're like the people that can afford to just pick up and buy a new house,

[00:25:48] they might want that same lifestyle. They might want that same neighborhood. So those houses could actually go up. So it's not a that's kind of an immediate thing. Those houses could go up in the immediate. But what we see in Florida is essentially we see slowly more and more things come to market, slowly more and more things sit and then more people list. And that's what you're going to see in California. So in the short term, you might have real estate prices go up as all these displaced people are looking for a house to buy, the ones that can afford to.

[00:26:18] Well, we saw this already during the pandemic. We saw areas like, you know, you guys don't like to pick on my hometown of Seattle or we saw like when I went up there, what, two weeks ago? And my friends are like, oh, we don't even go downtown anymore. Now, there's all kinds of reasons. It's political. I don't want to go into it. The reality is, though, people move out of Seattle, but they're over very far. They just moved as a burbs, you know, and so they still want to be in Washington, as an example. Same thing with San Francisco.

[00:26:47] So that's what you're talking about. What you're talking about is there's a surge of people that will stay within the state and will be kind of local. A lot of people are working local and, you know, they're going to look for something that's still convenient for them. They're around friends and family and all those kinds of things. And that's going to drive prices up because the supply is limited. Right.

[00:27:14] What's really going to be interesting during that period of time is if there's anything under construction in California or Arizona or Nevada, and now you have this, this just adds to the amount of construction. Right. So, you know, the contractors, general contractors, all the subcontractors are going to be extremely busy over the next three or four years in the West. Right.

[00:27:44] In the West, for sure. And we see this. You've seen this in Florida with the hurricanes. You've seen this in Texas. And so this is going to happen. It's going to be incredibly robust period of time if you're in that, if you're in that business for providing services as a contractor, for example. So Josh from YouTube said, you know, if somebody builds a smaller home, the bank will do a before and after value via appraisal.

[00:28:13] If owners can't pay the difference, they will foreclose. Okay. Yeah. So that's kind of how that works. Thank you, Josh. I appreciate that. I didn't know the answer. Yeah. No, but I do think, though, so is there any, like what, like say that, say that you were somebody that either just had their house burned down and they want to exit it or they want to stay. What's some advice for them? Well, they don't really have an option to stay. Well, no, I mean, but they want to rebuild.

[00:28:42] They want to rebuild or they want to exit. If you have a mortgage and you have a lot and you have a home that was destroyed or apartment building or a retail building or whatever it is, you're going to have to negotiate with insurance and you're going to have to move forward with the process of rebuilding. Period. You're going to have to because that's the only way that you're going to get the value back. And it's covered by insurance, which you've been paying all along.

[00:29:06] So, you know, I'm sure there's a significant amount of net worth sitting inside of those insurance policies that people pay. Right. Because insurance is a way to protect your assets. That's what it is. That's what it's for. And so you're going to have to, unfortunately, like Adam Carolla said, you're going to have to fight with those permits, the contractors and insurance companies and adjusters.

[00:29:33] And for those of you who've never done it before, it's daunting. Right. Right. It's daunting. You guys know already how when you want something done at your home, let's say, and you might get three bids and they're all over the place and the contractors are sometimes there, sometimes not there.

[00:30:01] And no disrespect to the ones that are always there and doing great jobs. But the industry can be spotty, right, from time to time with who you can trust, what kind of work they're doing and how often they're showing up. And before we jump into this any further, I did want to say we do have a podcast where we talk about these things and real estate. It comes out on Thursdays. It's called The Ken McElroy Show.

[00:30:27] So if you guys want to check it out, just go ahead and scan the code. So one of the... But to keep going, too, is that somebody said to hire a private adjuster as well. Yeah, they're called private. Yeah, I've done that. It's called a private adjuster, public adjuster. So how this works is I've done it several times. It's somebody that represents you based on your policy.

[00:30:57] And I'm sure the ones that I've used are actually attorneys. So when you get a policy and you sign a policy, it might be five, six, seven pages, maybe one just with summary. But the real policy is really, really big. Like it's very, very clear. There's a whole policy. There's a whole huge document behind the actual policy that says what's covered.

[00:31:21] The public adjuster or private adjuster, in my experience, they dig into the policy and they actually negotiate for you with and against the adjuster that's being represented by the insurance company. I've had both positive experiences and negative experiences with this. So, you know, I'm not going to tell you exactly what to do.

[00:31:46] But having somebody who understands insurance policies at this point is paramount. Understanding what your policy gets. Because you think about it, if the insurance business, as much as people don't want to hear this, their job is to settle as little as possible and quickly. So people are asking about BlackRock.

[00:32:14] So do you see BlackRock or other investors coming in and wanting the dirt? I mean, do you think that that is something that might start to happen? I personally don't. No. I mean, what are they buying? Like there's no cash flow. There's a lot. Yeah. And then it's got a claim on it. Right. So I bought properties before that have, you know, we've been in escrow when there's been a fire. And so how do you do that? What happens?

[00:32:41] Well, what that means is I'm buying something that's not 100%. Right. So then there's typically there's a hold back or something like that. So it's possible that you might find somebody that would take on that risk. So they would buy. And what would you sell it for? You can't sell it for, you know, the land plus the home. There's the home. Right. So there's significant risk to whoever would be buying that.

[00:33:10] So I would highly doubt that somebody would, although I could be wrong here, but I would highly doubt that somebody would buy land with a huge insurance claim. Right. Because then they have to navigate all of that. And I don't even know if you can. Right. You know, maybe you can. Well, you probably you probably can. But it's whose claim is it if you didn't pay the insurance? Right. Right. It'd be interesting how you'd almost have to settle the claim, I would think, before you

[00:33:40] could sell the property. And the only way to settle a claim is to get your final certificate of occupancy on a home. Yeah. Yeah. Or what? Or pay off the mortgage. Or pay off the mortgage. Yeah. That's true. But then you still have a claim. The insurance is different than the lender. So, yeah. Well, it's going to be interesting because also, you know, if somebody just takes money for the dirt, what is the dirt really worth? Because to your point, there's going to be five plus years of construction.

[00:34:07] You're going to I mean, it's not just like building a house from scratch. You have a decimated area around it. So whether it's an investment or if it's for your own self to live. I mean, if this is somewhere you want to live, it might be something you can take advantage of. But it also what's it going to build back to? Like, when is it going to be nice? And it's going to be years, you know, I mean, it could be a decade. Honestly, it's going to be years.

[00:34:32] I like this is you guys know that I bought a property in Sedona called Orchard Canyon. It's the resort. I bought it in 2014, 10 years ago, actually almost about 10, exactly 10 years ago. While I was in escrow, they had you can Google this. It's called the Slide Rock Fire and the Slide Rock Fire rolled up the canyon and basically went right to the property, burned a bunch of stuff in between.

[00:35:00] I went right through Slide Rock State Park and I was in escrow during the time. And, you know, luckily, you know, the structures, there wasn't significant damage. But one of the things that I saw, first of all, was how devastating it was. Now, this is it rolled right through, went up to Flagstaff and then they ended up putting it out, thankfully.

[00:35:21] But I gotta tell you, after maybe three or four years did you start to see things kinda, you know... Egal ob sie gerade erst beginnen oder ihr Sicherheitsprogramm erweitern, herausragende Sicherheitspraktiken zu demonstrieren und Vertrauen aufzubauen ist wichtiger denn je. Vanta automatisiert die Einhaltung von ISO 27001, SOC 2 und mehr, spart ihnen Zeit und Geld

[00:35:50] und hilft ihnen das Vertrauen ihrer Kunden zu stärken. Darüber hinaus können sie Sicherheitsüberprüfungen vereinfachen, indem sie Fragebögen automatisieren und die Sicherheit ihrer IT-Infrastruktur mit einem kundenorientierten Trust Center demonstrieren. Über 9000 globale Unternehmen wie Atlassian, Flow Health und Quora nutzen Vanta bereits, um Risiken zu managen und Sicherheit in Echtzeit nachzuweisen.

[00:36:14] Erhalten sie ein spezielles Angebot von 1000 Dollar Rabatt unter venta.com slash horen. ...back. Like, you know, it looked like, it looked like the moon. Like, it was like everything gone, down to the, down to the ground. Um, and, um, you know, by the time the forest came back and the structures started being rebuilt back and all that kind of stuff, it was, it was years. And even, uh, I was there over Thanksgiving.

[00:36:41] Um, 10 years later, uh, we still saw, there were still remnants you could still see. And that was a small fire computer. 10 years later. So, so, you know, so when you, you know, how quickly, when you start to look at these neighborhoods, they're all, they're all in different insurance companies, right? So how quickly are the insurance companies going to pay out? How quickly are they going to start construction? How quickly are you going to get something redesigned? How quickly are you going to get permits?

[00:37:09] How quickly are you going to get contractors that can actually build these things? And at what pace? You're going to have some houses that start first and then you have other houses that won't start for a year or more later in the same neighborhood. And Sterling made a good point. He's like, California has already decided to write less single family dwelling permits. If anything, the Palisades will look like a plot of condominiums. Yeah. So they might, you know, cause that's what you are at the behest of the government and California is not super pro building like Florida.

[00:37:38] So also they might say that they might not issue you the permit. I mean, that's actually what happened to Suzanne Summers and her husband when their house built up burned down after four years of waiting for a permit, they just moved and sold the land because they didn't want to deal with it anymore. Yeah. And that's, and that could happen too. So, you know, part of buying legacy, beautiful projects like down on the beaches of Malibu,

[00:38:02] you know, I mean, you put these piers into the sand, you know, concrete and you start to build on some of these coasts. People don't want that. You know, I mean, when you drive by those houses, you can't see the ocean. Yep. Now you can. But, you know, I mean, no, it's horrible to say that, but it's the truth. So, so there's going to be some real talk about what do they want there? You know, and who pays that? I don't know how easy it's going to be to replace.

[00:38:33] When you have a home that was built in the sixties or seventies, it's that gorgeous. And, you know, I know we're just talking about Malibu, for example, but there are things that you cannot do that, that were there already. They're not going to allow you to go back and build it the same way. There's different kinds of engineering and different kinds of codes and stuff like that. And so those are all going to be part of wrapped up into that insurance policy.

[00:38:57] I remember when, when we had Hurricane Ike roll through and rip, rip apart some of our stuff, our construction costs of the replacement costs were so much higher than what we were insured at because, because of what the town required. Well, and this is interesting too. You know, I'm looking at the Lahaina fires now online, just out of curiosity, and they've only had a little over 30 rebuilding permits issued. And how long ago was that?

[00:39:25] Um, I don't know, but whenever it was. When was Lahaina, Jerry? That was over a year ago, about a year and a half ago. So there you go. So that's one year later. Mm-hmm. So they're in, in Hawaii is very similar to California in their rebuilding process, I would imagine, just government and everything else. So, I mean, this is going to be a very slow process. Yeah. Yeah. It's, it's horrible. So, so I think people are going to have to make a lot of tough decisions, right?

[00:39:51] Um, thankfully there wasn't more loss of life, but you know, with what we've seen on, at least that we know of on the, uh, on the news so far, but it's going to be, I would say three to five years. And then you got to decide, um, is that really where you want to be? Right. Right. Right. And, and we do, you know, think that this is going to impact positively. Like I said, the Vegas market, the Scottsdale market, the Phoenix market, um, and other areas, and other area, and even other areas of California too.

[00:40:19] I mean, you, you could see, you know, you know, some price adjustments based on that. I would guess I would guess this is a, this is just a massive displacement of people. So many people. They're going to go somewhere. Renters, homeowners, business owners, you watch. Um, they have to go somewhere guys. There's, they can't just flip the lights on Monday. Like this is, this is a several year. And in jobs too. I mean, if these people had jobs or you didn't work remotely, like they are going to need a

[00:40:48] new job and everything else. Well, I think that hopefully the employers are going to be a little lenient there. Um, but there's a lot of will, but what if, what if they just lost their business too? I mean, they can't keep paying people if their business just burned down. Yeah. That's a good point. Yeah. I mean, so there's going to be a mass displacement and, uh, it's something we're going to follow just like we're following, you know, in, uh, Florida, you know, what's happening there. And I think what you're going to start seeing next, you're going to start to see, I mean, insurance has to come out with new premiums and new stances on this.

[00:41:17] So you're going to see that in the next couple of months. And then you're going to start to see listings piling up. Yeah. I, if you guys remember, this is not, um, uh, I don't know if you remember, there was a condo project that collapsed into the water in Florida. I was a year or two ago or something like that. The result of that changed the condo insurance laws dramatically. So now I'm not saying it shouldn't either.

[00:41:43] I'm just saying that the, the, that's what happens when, when disasters like that happen, people take notice and then insurance companies take notice. And all of a sudden loss change, regulations change and codes change and those kinds of things. So that all adds cost. And that rolled across the country. Like one of the things that Daniel and I were just looking at recently was the affordability crisis. Of course, we all know, uh, we all talk about inflation, all those kinds of things.

[00:42:13] But you know, what's, what people, you know, what's starting to jump up right now are condos. Yeah. HOA fees. Yeah. HOA fees. And, and the, the cost of living in these HOAs is condominiums and stuff are jumping like crazy right now. Um, for the same kinds of reasons that, um, you know, your, your car insurance went up, your home insurance went up, you know, whatever kind of insurance you have all went up. And, and so they're passing that on.

[00:42:40] And they're passing those costs back on to the consumer as they will. Right. And so, um, I think, um, you know, this is just, it's, it's, it's really going to make, um, the insurance industry is going to be under a spotlight in my opinion, probably with this next administration has to be. Um, and they're going to have to do a deep dive and they have to figure out how to make this affordable because if you're going to mortgage something, your lender is going to

[00:43:08] require insurance and they're going to, and whenever they require the, the lender, you have to buy period. So the lender says, I need this much coverage and you have to buy it. And so the, it's going to be, if there's only one insurance companies or two or three or four, it's going to make a difference. If there's only one, it's going to be a real problem. You know, we saw this during Obamacare, uh, with health insurance, you know, um, and, um,

[00:43:38] in, in Arizona, we went from like, I think there was over 10 insurance companies for healthcare at the time and it went all the way down to one and all of a sudden the costs went up because the last insurance company standing, you know, could kind of charge higher prices. And so, you know, there's going to be, there's going to have to be a massive insurance investigation and they're going to have to dig into this stuff to make sure that the consumer can afford this. Absolutely. And we'll see you guys next Monday.

[00:44:08] Thanks guys. Egal, ob Sie gerade erst beginnen oder Ihr Sicherheitsprogramm erweitern, herausragende Sicherheitspraktiken zu demonstrieren und Vertrauen aufzubauen, ist wichtiger denn je. Vanta automatisiert die Einhaltung von ISO 27001, SOC 2 und mehr, spart Ihnen Zeit und Geld und hilft Ihnen, das Vertrauen Ihrer Kunden zu stärken.

[00:44:37] Darüber hinaus können Sie Sicherheitsüberprüfungen vereinfachen, indem Sie Fragebögen automatisieren und die Sicherheit Ihrer IT-Infrastruktur mit einem kundenorientierten Trust Center demonstrieren. Über 9000 globale Unternehmen wie Atlassian, Flow Health und Quora nutzen Vanta bereits, um Risiken zu managen und Sicherheit in Echtzeit nachzuweisen. Erhalten Sie ein spezielles Angebot von 1000 Dollar Rabatt unter venta.com. Und dann gehen Sie an die Może sonstigen. Jetzt kommen Sie bitte auf die Woordnungen. Das wird Czyn.》