I'm a life-long CA resident as well spent most of my time in Santa Monica / WLA but recently lived in Nor. Cal. south bay for about 4 years. I've just moved back to So Cal in San Diego.
When I was a teenager growing up in LA, we had massive fires raging in malibu / topanga, massive earthquakes that took out siginificant infrastructure (remember northridge?), and a huge RIOT in south central (yeah that was fun). I remember a lot of Christians were claiming that the end times had come.
The upshot? No one left california, much less LA. I don't think people really give much thought to these calamities when they move out here. I don't think the fires this time will have any bearing on the overall market.
Regardless, I see LA and San Jose / San Francisco residential RE still massively overvalued, and it's my thinking we will see a quick, heated, run down in prices, followed by a few years of droop or stagnant prices. Why? simple. The credit markets are in the process of returning to normalcy. Buyers will only receive financing based on a healthy debt to verified income ratio. The way prices stand now, most won't qualify, and that's why the market liquidity has dried up.
Some insist that our local RE markets have remained robust in the face of a nationwide slump. The truth, I think, is that without bids in the market, the actual value of homes is quickly running away from what sellers are asking. The bottomline truth is, just as the value of debt-backed securities is largely unknown, so is the median price for regional areas like San Jose, LA, Irvine, and San Diego.
RoughTrader