California fires won’t scorch economy here, experts say

Although the pictures of the devastation look bleak, it is far less than the $41 billion in damage caused by Katrina, said Robert P. Hartwig, a spokesman for the trade group Insurance Information Institute in New York.

In 2005, Katrina created such a demand for building supplies for home repairs and rebuilding in the Gulf Coast region that it caused an increase in lumber and drywall costs for new homes built in Maryland and elsewhere, building experts said.

Housing and insurance experts, however, do not expect to see similar fallout in Maryland from the California disaster.

‘‘Probably a very, very modest rise if at all,” said John Kortecamp, executive vice president of the trade group Home Builders Association of Maryland.

California’s building material needs should be met by the West Coast’s supply chain, he said.

Kathleen M. Maloney, executive vice president of the Maryland State Builders Association, agreed.

‘‘The [housing] market has been so soft lately. I would think we would be able to absorb that spike with no problem,” Maloney said. ‘‘I’ve not heard from any of our members that there’s any concern of that at this point.”

And even with more than 1,000 homes destroyed in the region, the San Diego area still has a glut of homes on the market, said Albert S. ‘‘Pete” Kyle, professor of finance at the University of Maryland’s Robert H. Smith School of Business.

There are 21,000 homes for sale in the San Diego area, many of them unoccupied because speculators built the houses before the housing bubble burst, he said.

‘‘It’s not going to be like Katrina, which caused a housing shortage,” Kyle said. ‘‘There’s a lot of $1 million homes there, but it’s the land and not the home. In California when you’ve got a million-dollar house, when the house burns down, you’ve still got a $700,000 lot.”

The insurance industry also should not see too much of a setback from paying out the claims, he said.

‘‘One billion dollars is fairly small compared to the much bigger things that have happened in the past like Hurricane Katrina, which they were able to absorb,” Kyle said. ‘‘That’s a drop in the bucket. For us locally, there’s nothing to worry about in terms of rising insurance rates.”

Insurers paid $41 billion after Katrina, he said, ‘‘so this is very manageable.”

Hartwig agreed, saying the total damage from the blazes on the West Coast will be similar to the amount insurers paid out during the 2003 fire season.

‘‘The fact is, as spectacular as the images were, the losses are fairly routine for California,” Hartwig said. ‘‘People who live on those vulnerable ridges do pay a lot for their insurance and will continue to pay a lot for their insurance. This is a common occurrence in California, and so the risk is already embedded in the premiums.”