Firefighters after nearly a month had by late December of last year mostly contained the Thomas Fire, the biggest wildfire in California's history. But the fire, which started Dec. 4 about 60 miles northwest of the center of Los Angeles, had already destroyed more than 1,060 structures and burned more than 281,000 acres.

As firefighters continue to douse the fire, the question now is how the wildfire will impact the Southern California economy and its housing market. Will it impact Los Angeles mortgage rates and the surrounding areas? Will it cause housing prices to increase? Will those applying for FHA loans in Los Angeles and its nearby communities have to borrow more as they work to buy homes that suddenly come with a higher price tag?

They might, because local experts are warning that housing prices in Southern California might increase. The housing market here was already a tight one. With so many homes destroyed, the price tags of surviving properties are expected to jump.

Finding a home could be a challenge

James Green, founder of Agoura Hills, California-based Home By Home, a site that helps buyers and sellers find real estate agents, said that in the short-term, the devastation caused by the fires will make finding a home in Southern California communities a challenge.

"Southern California is already one of the most competitive housing markets," Green said. "With fewer homes and more buyers, prices are likely to go up in the near-term. Areas like Ventura, where the Thomas fires have destroyed hundreds of homes, are going to be tough places to find a new home for the next few months."

The mortgage hurdle

Buying a home in Southern California is already a challenging financial feat. According to CoreLogic, the median sales price of homes in Los Angeles County stood at $567,000 in November. That figure is 7 percent higher than in the same month one year earlier.

Buyers who take out home loans in Los Angeles, then, typically have to borrow more, and face larger monthly payments. If housing prices continue to rise, the monthly mortgage payments of new buyers will increase, too.

Buyers can turn to FHA loans to provide some relief from the larger down payments that more expensive homes require. But even those borrowers who qualify for FHA Mortgages with a 3.5 percent down payment, will still have to come up with thousands of dollars because of the higher prices of these residences.

The higher prices also mean that many buyers here must turn to mortgage lenders for jumbo mortgages. In Los Angeles County, the conforming loan limit – the limit at which buyers can still use a conventional mortgage loan to finance their home purchase – stood at $679,650 in 2017. Those borrowers who need a loan larger than that, will have to rely on jumbo loans, which typically come with higher interest rates and closing costs. Homes that cost more than that $679,650 figure are not a rarity in Los Angeles and its surrounding communities.

A rising need for rental housing

Kaycee Wegener, manager of marketing and media relations for Rentec Direct, a property management software company based near Southern California in Grants Pass, Oregon, said that this natural disaster will indeed put pressure on the Southern California housing market. But Wegener said that it will also pose challenges for landlords and renters.

With so many houses destroyed, the demand for rental property in Southern California will rise, Wegener said. The challenge will be for renters to find quality temporary housing, especially as the competition for this short-term housing increases.

"Rebuilding efforts will be massive in the region, and will likely slow, due in part to labor shortages in the construction industry," Wegener said. "In the meantime, families will likely have to live in temporary housing or temporarily relocate. Property managers and landlords need to be aware of their responsibilities to tenants who have been displaced, while tenants should also be aware of their own rights."

Families moving into temporary rental housing do have the right to a unit that is fit to live in, Wegener said. These units must also comply with state and local building and health codes.

Chasing some away?

William Seavey, a retirement consultant and owner of RetirementPossibilities.net in San Luis Obispo, California, predicts that the fires will discourage many from considering a move to Southern California. As Seavey says, drought-like conditions have plagued the region for more than 10 years. This makes the threat of wildfires a constant one.

Meanwhile, housing prices in areas such as San Luis Obispo continue to soar, already limiting the number of people who can buy here. Seavey says that there is already a serious shortage of affordable homes in the area.

"Some pre-retirees and retirees over 50 may feel that they can get more bang for their bucks elsewhere, in places like Nevada and Arizona or even the Midwest," Seavey said.

Seavey said that he, too, expects housing prices to continue to rise in the region, something that would have happened even without the devastation of the wildfires.

"There is a run-up now, and only the really well-off can afford to stay," he said.