LA Wildfires Could Drive Up Building Costs Across California

Contractors across the Bay Area have struggled for years to find enough construction workers, while rising material prices have made the region one of the costliest places to build in the U.S.

Now the wildfires that torched an estimated 12,000 structures across Los Angeles County are expected to make the building challenges in the nine-county region even worse, the San Francisco Chronicle reported, citing building industry professionals.

The construction industry anticipates years of disruption from the L.A. fires that could make it much harder to build across California, with building costs expected to soar across the state.

“Like a sponge, it is going to draw contractors down to that area,” Shawn Ajdari, owner of AYA Homes, a San Francisco-based firm specializing in custom home building and remodeling, told the newspaper.

While the fires’ impact on the Bay Area isn’t likely to be felt immediately, he said, the scale of the devastation and rebuilding would draw contractors and workers to lucrative jobs in fire zones.

Ajdari, who once lived in Georgia, said he saw similar patterns play out when hurricanes swept across Florida. He recalled when he couldn’t find roofers for some homes he built because they had all gone south to make “more than two, three times what we could pay.”

Southern California “may draw contractors from surrounding areas and other parts of California to the point that locals in other areas will feel the pinch,” he said.

And the crunch could be especially pronounced because California’s laws require contractor licensing, which limit out-of-state contractors’ ability to work in the state.

Matt Everson, co-owner of BW Builder in Sonoma County, said a similar shortage occurred after the Tubbs Fire of 2017 tore through parts of Napa, Sonoma, and Lake counties.

Within three years, labor prices doubled while economy-wide inflation jacked up the price of materials such as lumber and steel. The resulting squeeze was “an imperfect storm” that increased building costs for homeowners by about 20 percent, he said.

Everson expects building costs to soar across California in the coming years as a result of the Los Angeles County wildfires. “We are not going to find 10,000 contractors overnight,” he told the Chronicle. “The problem is there are just not enough builders.”

A surge in demand for materials, labor and other services after a natural disaster typically increases costs from 15 percent to 30 percent, according to CoreLogic

Jesse Carter, vice president of operations for Allied Framers, said his firm is looking to see whether the L.A.-area fires make it harder to source lumber. While it’s too early to predict exactly how the fires will affect Bay Area construction, he said, “we owe it to our clients to have a plan.”

— Dana Bartholomew