Rebuilding will be costly for fire-devastated communities

Summary

Marketplace Morning Report: Rebuilding Will Be Costly for Fire-Devastated Communities

Release Date: January 22, 2025

In this episode of Marketplace Morning Report, host David Brancaccio delves into the multifaceted challenges faced by California as it seeks to rebuild communities devastated by recent wildfires. Additionally, the report covers significant national policy shifts impacting diversity, equity, and inclusion (DEI) programs within federal agencies, and explores the implications of the United States potentially withdrawing from the World Health Organization (WHO).

---

1. The Herculean Task of Rebuilding Post-Wildfires in California

David Brancaccio opens the episode by highlighting the severe impact of the wildfires in Southern California, which have tragically claimed 28 lives and destroyed approximately 14,000 structures. The immediate concern revolves around housing the tens of thousands displaced residents, but the long-term challenge of rebuilding at such a massive scale looms large.

Justin Ho, Marketplace’s correspondent, outlines the primary obstacles facing the reconstruction efforts:

• Labor and Material Shortages: The home construction market is grappling with a persistent shortage of skilled labor and essential building materials, including electrical transformers. These shortages are exacerbated by expensive construction loans.

  “Even though Federal Reserve interest rates have come down, we still see lending rates for builders around 10 to 12% right now.”
  – Jim Tobin, CEO of the National Association of Homebuilders [01:20]

• High Construction Costs: Jim Tobin emphasizes the unique challenges in California’s housing market, noting it as the most expensive in the country due to layers of regulations, property price surges, and construction delays.

  “You're talking about the most expensive market to build in the country anyway. Layers of regulations, delays, the high prices of properties.”
  – Jim Tobin [01:38]

• Lumber Prices: While Greg Kuda, CEO of Westline Capital Strategies, points out a slight decrease in lumber prices in recent years, he warns that potential new tariffs on Canadian lumber could cause prices to spike if demand surges during the rebuilding phase.

  “You actually have the demand to rebuild, prices could be substantially higher a year from now.”
  – Jim Tobin [02:03]

Despite these challenges, there are silver linings. California Governor Gavin Newsom has signed an executive order aimed at expediting the rebuilding process by suspending certain permitting requirements and environmental reviews. Darryl Fairweather, chief economist at Redfin, highlights these measures as pivotal in accelerating project approvals and utility hookups.

> “Looking at wildfires in California that happened in the 2010s, we found that new construction bounces back fairly quickly.”  
> – *Darryl Fairweather* [02:30]

However, the decision to rebuild is not straightforward for displaced homeowners. Fairweather notes that many may opt to sell their damaged properties to developers, attracted by lucrative offers that often exceed insurance payouts due to the high value of the land.

> “Like people are going to find that the offers that they get from developers are going to be quite large and maybe bigger than what they're getting from their insurance company.”  
> – *Darryl Fairweather* [02:47]

---

2. Federal Rollback of Diversity, Equity, and Inclusion Programs

In a significant policy shift, the Trump administration is prioritizing the elimination of DEI programs within federal agencies. Nancy Marshall Genzer, Marketplace’s Washington correspondent, provides detailed insights into these changes.

The Office of Personnel Management issued a memo mandating that agency and department heads notify DEI employees of their immediate placement on paid leave. Consequently, DEI offices across federal agencies and departments are being shut down, with the affected workers facing eventual job termination or reassignment.

> “These executive orders could be challenged in court. I noticed the executive order says DEI programs should be terminated, quote, to the maximum extent allowed by law.”  
> – *Nancy Marshall Genzer* [04:09]

Additionally, federal contractors are now barred from incorporating DEI preferences in federal contracting and spending, as per the Office of Federal Contract Compliance Programs.

The administration's moves have sparked expectations of legal battles, with civil rights groups preparing to challenge the executive orders.

---

3. Potential U.S. Withdrawal from the World Health Organization

Another pivotal topic covered is the United States' move to withdraw from the World Health Organization (WHO), a decision initially attempted by former President Trump in 2020 but never realized due to the election outcome. Samantha Fields, Marketplace’s correspondent, discusses the ramifications of this potential withdrawal.

The U.S. is the WHO’s largest funder, contributing approximately 16 to 18% of its budget. Jesse Bump from the Harvard School of Public Health warns that the absence of U.S. support would significantly impact the WHO’s operations, reducing both financial resources and critical expertise.

> “And if it's not sharing its own information with others and it's not receiving information from others, public health disasters that don't have to happen will happen because those capacities aren't there anymore.”  
> – *Rob* [06:27]

The WHO has expressed hope that the administration will reconsider, but the withdrawal is set to take effect within a year unless revoked.

---

4. Community Voices and Support

The episode also features testimonials from listeners like Emily from Paxton, Nebraska, and Rob from London, Ontario, who express their appreciation for Marketplace’s informative and engaging reporting. Their endorsements underscore the vital role Marketplace plays in disseminating credible news to diverse communities.

---

Conclusion

This episode of Marketplace Morning Report provides a comprehensive overview of the daunting yet navigable path towards rebuilding California's fire-devastated communities. It juxtaposes this with critical national policy changes affecting DEI programs and global health collaboration through the WHO. Through expert interviews and firsthand accounts, the report paints a vivid picture of the interconnected challenges and potential solutions shaping today's economic and social landscape.

---

For more insights and detailed reporting, visit Marketplace and consider supporting their vital journalism.

Transcript

[Glassdoor]

This Marketplace podcast is supported by Glassdoor, announcing the best places to work in 2025, as determined by anonymous reviews from the people who Know Best real employees. Did your company make the list this year? Learn who's leading the way in workplace culture and employee satisfaction and see who's hiring today. Then join the conversation in the Glassdoor community to plot your next career move and make the most of your work Life. [e-mail].

[David Brancaccio]

Where is California going to find the wood and the people to rebuild after the fires? I'm David Brancaccio. Some welcome rain is in the forecast for Southern California this weekend, although warnings for high winds that can fan flames remain into tomorrow. The wildfires have killed 28 people and destroyed some 14,000 structures. Officials are focused on housing the tens of thousands of people displaced. But for the weeks and months ahead, Marketplace's Justin Ho looks at the challenge of rebuilding at this scale.

[Justin Ho]

First of all, the rebuilding effort is going to face many of the same challenges that the entire home construction market's been facing for years now. Shortages of skilled labor and building materials, including electrical transformers. Also expensive construction loans.

[Jim Tobin]

Even though Federal Reserve interest rates have come down, we still see lending rates for builders around 10 to 12% right now.

[Justin Ho]

That's Jim Tobin, CEO of the national association of Homebuilders. He says home construction in California comes with its own set of challenges, too.

[Jim Tobin]

You're talking about the most expensive market to build in the country anyway. Layers of regulations, delays, the high prices of properties.

[Justin Ho]

One silver lining is that lumber prices have actually come down in recent years, says Greg Kuda, CEO of Westline Capital Strategies. But he says the possibility of new tariffs on Canadian lumber could push those prices back up, especially if demand for lumber surges at the same time, when.

[Jim Tobin]

You actually have the demand to rebuild, prices could be substantially higher a year from now.

[Justin Ho]

But there are some unique factors that could help usher along the recovery process. Last week, California governor Gavin Newsom signed an executive order meant to speed up the rebuilding effort by suspending certain permitting requirements and environmental reviews.

[Darryl Fairweather]

It will be easier to get projects approved. It will be easier to get the hookups necessary for utilities.

[Justin Ho]

That's Darryl Fairweather, chief economist at the real estate company Redfin. She recently looked at how fast homes got rebuilt after previous fires in California.

[Darryl Fairweather]

Looking at wildfires in California that happened in the 2010s, we found that new construction bounces back fairly quickly.

[Justin Ho]

That said, people who've lost their homes will still have to decide whether the costs of rebuilding are worth it, fairweather says. Many will likely say no, especially if they get an offer from a developer to buy up a damaged property.

[Darryl Fairweather]

Like people are going to find that the offers that they get from developers are going to be quite large and maybe bigger than what they're getting from their insurance company.

[Justin Ho]

That's because that land is valuable and builders know that redeveloping it could be pretty profitable. Justin I'm Justin Ho for Marketplace.

[David Brancaccio]

The Trump administration is prioritizing the shutting off of diversity, equity and inclusion programs. Federal employees who work in DEI offices are being put on paid leave today. Our Nancy Marshall Genzer joins us now.

[Nancy Marshall Genzer]

Nancy, the Office of Personal Management sent out a memo on this yesterday, David, and it says agency and department heads have to send out notices by 5pm Washington time today telling DEI workers they'll be put on paid leave effective immediately. And the DEI offices they work for in federal agencies and departments will be closed. Those workers will eventually lose their jobs or be reassigned.

[David Brancaccio]

And federal contractors, too.

[Nancy Marshall Genzer]

Yeah, the White House issued a fact sheet on that and it says DEI preferences in federal contracting and spending will end. And the Office of Federal Contract Compliance Programs is now barred from pushing contractors to balance their workforces based on dei.

[David Brancaccio]

Now, some of this will end up in court.

[Nancy Marshall Genzer]

These executive orders could be challenged in court. I noticed the executive order says DEI programs should be terminated, quote, to the maximum extent allowed by law. And civil rights groups have been gearing up for court challenges on some of these executive orders.

[David Brancaccio]

Washington correspondent Nancy Marshall Genser.

[Emily]

Hi, this is Emily from Paxton, Nebraska. I live in a rural area where the written local news has been outsourced to a bigger city and the local newscast is not very good. I enjoy listening to Marketplace programs because they are informative and thought provoking. I learn about things, places and people that I would not have found anywhere else. I am so grateful for Marketplace's dedication to bringing the news to the people. Join me in supporting Marketplace with a gift today. Go to marketplace.org donate and thank you.

[David Brancaccio]

Among the many executive orders is pulling the U.S. out of the WHO, the World Health Organization. The U.S. is its biggest funder by far. Marketplace's Samantha Fields has more on what a U.S. withdrawal from that health organization could mean.

[Samantha Fields]

President Trump first tried to pull the US out of the WHO back in 2020, but ran out of time when he lost that election. Jennifer Cates at the health policy nonprofit KFF says when he won this time.

[Nancy Marshall Genzer]

This was widely expected.

[Samantha Fields]

Still, she says a US Withdrawal from the WHO would be a big deal for the agency.

[Emily]

The funding obviously would be a big hit for WHO. The expertise being removed is another.

[Samantha Fields]

The US contributes about 16 to 18% of the WHO's budget, far more than any other country. Jesse Bump at the Harvard School of Public Health says the US Also shares a lot of knowledge, staff and data.

[Rob]

And if it's not sharing its own information with others and it's not receiving information from others, public health disasters that don't have to happen will happen because those capacities aren't there anymore.

[Samantha Fields]

It'll take a year for the US Withdrawal to go into effect. The WHO says it hopes the administration will reconsider. I'm Samantha Fields for Marketplace and espn.

[David Brancaccio]

Part of what's called ESPN Beta, operated by Penn Entertainment, wants people to have what it calls the Talk with the Gambler in the Family. It's a new campaign to urge heart to heart conversations along the lines of set a budget for your sports gaming and don't be a knucklehead. Do you know the risks? Online? ESPN Smart Play will have resources because those risks include ruining yourself and your family. ESPN is partnering with the University of Nevada Las Vegas International Gaming Institute with an approach it says based on behavioral science. ESPN quotes the director of that institute saying that rather than just focusing on the negative, the promo spots will, quote, accentuate the positive by encouraging healthy habits. Being a better better is not just about knowing when to take risks. It is also about knowing when not to unquote. I'm David Brancaccio, Marketplace Morning Report from APM American Public Media.

[Rob]

Hi, this is Rob from London, Ontario. Marketplace is an amazing resource and part of my daily routine. I get highly credible information delivered in an intelligent, interesting, and at times humorous but always engaging manner. My day would be lessened without access to Marketplace. Join me in supporting Marketplace with a gift today. Go to marketplace.org donate.