LA Wild Fires & Local Real Estate Market: Prices may be getting hotter

The wildfires that have devastated the Greater Los Angeles area since January 7th have now been fully contained, but their impacts can be clearly seen both visually and at the real estate housing level.

With so many Angelinos entering the market for housing, the real estate market is seeing a massive influx of buyers and renters looking for housing. Here’s what we can expect over the next few months:

1. Rental Market

Impacts

• Increased Demand: Families displaced by the wildfire will seek temporary housing, driving up demand for rentals, especially in areas close to the affected zones or in high-demand neighborhoods.
• Higher Rents: Landlords may raise rents due to increased competition, particularly for single-family rentals or larger units suitable for families.
• Depleted Inventory: Short-term rental inventory (e.g., hotels, motels, and furnished units) may get booked quickly, leaving limited options for others looking for housing.
  

The rental market in Los Angeles is primed for continued price increases. With low inventory surrounding the burn areas, especially for the Palisades Fire area, finding affordable housing will be challenging for many working families.

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2. Home Sales Market

According to fire.ca.gov, a staggering total of over 16,000 structures were destroyed as a result of the Palisades and Eaton fires. These catastrophic events primarily impacted residential neighborhoods, leading to the loss of homes for approximately 12,000 families. To provide further context to this alarming situation, we can look at the recent housing market in Los Angeles. In 2024, the city issued just over 7,000 permits for new housing units. This figure may initially seem encouraging; however, when compared with the number of families now searching for a place to reside due to the fires, it paints a grim picture of the housing crisis at hand.

As the search for housing continues, there is a pressing concern about how these individuals will rebuild their lives and reintegrate into their communities under such dire circumstances. The challenges facing these families are multi-faceted. Local municipalities and charitable organizations are undoubtedly stepping up to aid these communities, but the gap between available housing and the overwhelming demand remains a critical issue that requires urgent attention and innovative solutions.

As we contemplate the long-term impacts of the Palisades and Eaton fires, it becomes evident that sustainable housing solutions must be a priority for policymakers and urban planners in Los Angeles. Strategies such as increasing affordable housing developments, creating incentives for rapid rebuilding efforts, and fostering community engagement in recovery plans could greatly assist in alleviating this significant crisis.

Impacts

• Increased Demand: Displaced families with insurance payouts or savings may look to buy homes, especially in areas near their original communities.
• Higher Prices: The influx of buyers, coupled with limited inventory, could drive up prices, especially in neighborhoods seen as safer or less prone to disasters.
• Shift in Preferences: Buyers may prioritize properties with fire-resistant materials, defensible space, or locations outside high-risk zones.
  

Thankfully, the governor and city are working to streamline the process of building new housing hoping to significantly speed up the time it takes to get people back into homes.

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The fires will obviously affect the rental market, but real estate sales will also see an influx of new buyers looking for housing. With potentially multiple thousands of new buyers suddenly looking for a home in Los Angeles, expect competition if you plan on buying this year.

Though the the South Bay may be too far for most victims that are searching for housing, there are many great communities on this side of town that would make for a great place to live, even temporarily.

Search San Pedro and Rancho Palos Verdes homes for sale: