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Even without The B1, the current real estate market is going to create some long-term financial stresses. The ten-year interest-only-option loans are letting many people get into houses they cannot otherwise afford. That's a financial time-bomb and a gamble that the market will produce a net positive ten years from now. Most likely, it will, but throw in a mag 7.9 in San Jose and suddenly the picture gets very grim. The onslaught of insurance claims will easily be triple that of the claims resulting from Loma Prieta; perhaps quadruple or more if the epicenter is in a metro area. This will place a tremendous financial strain on insurers, potentially closing the market to new policies for several years. That stated, the worry of big loans with little to no insurance is unfounded, IMO; I'm unaware of any lenders that do not include a mandate for insurance coverage as part of the loan agreement -- and they DO check to make sure you're premiums are paid up, too.

On the upside, your Home Depot stock would boom and it would be a great time to be a GC or a sub working in residential construction.

Contractors have been getting top dollar for two years at least.

What happened was many bought new homes and those who are staying in their old ones are all remodeling.

The war started an immediate increase in the price of wood as well, being much was shipped out to Iraq.

The states love these homes worth $280k being sold for $660k, because property taxes are skyrocketing new major income to the state.

I personally can't see average people handling living in a home with $750 a month in property taxes. Seems a large chunk of money in taxes going to the states there.

"That stated, the worry of big loans with little to no insurance is unfounded, IMO; I'm unaware of any lenders that do not include a mandate for insurance coverage as part of the loan agreement -- and they DO check to make sure you're premiums are paid up, too."

Let me restate that, because earthquakes aren't covered except under separately available policies. Lenders do not mandate earthquake coverage, although they do mandate general homeowner's insurance, in nearly every case. So, your concern is not unfounded, but well founded.

I don't have figures for the percentage of California real estate not covered by earthquake insurance; I suspect it's substantial. The coverage is pricey and some look at the cost/benefit analysis and think, "Yeah, I might need it, but probably I won't, so why spend the money? Besides, if things are so bad that my house is gone, I'll likely have bigger problems than worrying about how to fund rebuilding; things like medical care and/or funeral arrangements." Now, if you're buying a $700,000 house, I think you're less likely to think that way than if you only owe $100,000 on a property with a current market value of $500,000. If you're in the latter situation, you could likely bulldoze your house and sell the naked dirt for $100,000 more than you currently owe. So, if a big quake bulldozes it for you, the land value would be sufficient to provide most or all of the collateral for the loan you'd need to clear the lot and rebuild.