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Over 9,000 structures have been damaged or destroyed amid unprecedented wildfires that have been burning in Los Angeles for four days now. Ten people have died as a result of the fires.
The damage looks almost apocalyptic, according to those who are grappling with it first-hand, like The Altman Brothers’ Josh Altman, who said, “It’s worse than you imagine. Whatever you think it is — it’s beyond that.”
The decimation of entire neighborhoods like Pacific Palisades will create stress on the city’s already existing housing shortage. For now, those who have been displaced have evacuated to public shelters, the homes of friends or family, or hotels, but soon, those individuals and families will need to find short-term, long-term and, ultimately, permanent solutions to the question of where to live, whether they decide to rebuild or start fresh elsewhere.
The LA metro area already had a shortage of about 337,000 homes, according to data from Zillow obtained by The New York Times. As of December, the number of active listings was 26 percent below prepandemic levels.
“One of the biggest challenges ahead will be getting people who lost their homes into permanent, long-term housing,” Pasadena Mayor Victor M. Gordo said on Wednesday. Pasadena has been significantly impacted by the Eaton fire, with hundreds of structures damaged or destroyed.
In the short term, LA’s constrained rental market will likely become even tighter, since many displaced residents may bide their time renting while deciding on their next move. CoreLogic Chief Economist Dr. Selma Hepp said in an email sent to Inman that she expects rents to “surge” as those who evacuated look for shelter, which is a typical effect in areas that experience a natural disaster.
Local real estate agents have also scrambled to find new housing for those who have been impacted.
“When I tell you there are thousands of inquiries going around right now for rentals, there are thousands and thousands of inquiries,” James Harris of Bond Street Partners told Inman.
“The reality of this is that it is so fresh right now that people are just quite literally figuring out where they’re going to live for the next 90 days, let alone the next 12 months, three years, five years. So I think the primary focus right now is, Where am I going to put my family? Where are they going to live? How am I putting a roof over their head? And then I think step two is going to very much be, What am I going to do long-term?”
Firefighters tackle the Palisades Fire on Jan. 8, 2025 | CAL FIRE Official on Wikimedia Commons
The surge in rental demand may already be starting to reflect in rent prices, according to data Paul Salazar of the Salazar Group at Hilton & Hyland pulled on Thursday morning. That morning, there were 71 price increases clocked across all real estate types in the prior 24 hours, Salazar told Inman. Out of those 71 price hikes, 66 of them were on properties for rent.
“I don’t know if that’s people trying to just take advantage of the situation and get a higher price,” Salazar noted. “I’m sure some of them are — but I’m sure some of them are also offering the leases for short-term rent. So then naturally, if you’re offering a short-term option, the price increases.”
He’s also seen some homesellers take their for-sale listings in areas neighboring those impacted most by the wildfires off of the market, re-listing them as rentals, since they can get a high rent value now while there’s strong demand, and sell later down the line.
The displacement of so many people will also have an impact on those who haven’t been directly affected by the fires, as more people compete for housing in fewer areas. For instance, Dr. Jonathan Zasloff, a land use and urban policy professor at UCLA Law School who lost his home in Pacific Palisades, will likely seek out a rental closer to the university for the short-term, which will remove one more rental option from students and other renters looking for housing in the area, he told The NYT.
Affordable housing has been a major challenge in California for the past decade, with lawmakers passing a series of new laws at the state and local level to boost affordable units and make it easier to develop them. An executive order signed by LA Mayor Karen Bass streamlines permitting on projects in which all of the units are affordable.
In addition, within the past 10 years, California and LA, specifically, have continued to pass laws that make it legal and easier for individuals to build accessory dwelling units (ADUs) on their properties.
Even with these reforms, however, the city of LA and the state of California are behind their housing production goals. The number of apartment units approved by the city of LA dropped to a 10-year low in 2024, according to data from the Los Angeles Department of Building and Safety gathered by news site Crosstown LA.
Rebuilding in areas impacted by the fires will also present its own challenges, with the surge in demand for new construction leading to higher costs and increased pressure on overall housing production, which could actually slow the time it takes to build. On top of that, LA has also faced a long-term construction labor shortage.
It is still too early to say just how much the catastrophic fires will contribute to the existing shortage of homes since it’s unclear how many people will decide to remain in an area increasingly prone to extreme climate events.
“It [is] like COVID,” Harris told Inman. “There was so much we didn’t know. It was like, Am I ever going to live in an apartment building again? Well, everybody does today, but back then, they didn’t think they would.
“So I think as of right now, it’s too soon to know. But the obvious to us is, of course, there’s a housing shortage. Of course, we’re going to have to figure out where we’re going to put all these people, but until we understand, Do these people want to rebuild their existing lots? Do they want to sell their lot and buy a [finished] house? Do the insurance companies pay what they’re supposed to pay? Do people really understand what their insurance offers? Do people have insurance?
“There are so many unknown questions right now that we’re not going to have answers to for at least a couple of months. That’s the reality of it all.”
Email Lillian Dickerson
