Prices will fall due to the fire. Least that’s my expectation. There are two forces that you must weigh in order to make this decision. First, as Raptorduck mentions, some of the people who lost there homes will simply buy another home. And the second force is that there will be some people who had been thinking of retiring or moving to San Diego who will now be less inclined to do so. Obviously, the people who lost homes and simply go buy another will increase demand. Those that decide not to move to San Diego will decrease demand. So the question is which of these two forces do you think will be stronger?
My belief is that only a few people who lost their homes will simply go out and buy another. There might be a few who can do that, but most will need to settle insurance and deal with their previous house, either sell off the lot, or rebuild then sell. Thus the increase in demand from people who lost their homes will be slight.
On the other hand, during the week of the fires, I heard from many friends and relatives all over the country asking about the fires. All their comments made it clear that they were really surprised/shocked by what was going on. While I have no real evidence or data, my hunch is that the fires will discourage a lot of people who were thinking of moving here. Thus I believe the decrease in demand caused by people not moving here will outweigh the increase in demand caused by people who lost their homes.
But, as a side note, I will also mention that I believe the popping of the real estate bubble will far outweigh either of these two forces. And so prices will be going down regardless of the impact from the fires.
