What do the LA fires mean for the county housing shortage?

The fires burning in Los Angeles County have forced more than 150,000 to evacuate. Officials estimate as many as 10,000 buildings have burned. That means many of the displaced victims will be looking for somewhere new to live, which could be difficult in LA given the county is already lacking enough available homes.

The people displaced in the Los Angeles fires won’t get to move back to their neighborhoods any time soon.

“The real restriction is just on labor and getting all that work done,” said Daryl Fairweather, chief economist at Redfin. She said her company analyzed other California fires, and it takes most people at least two years to rebuild. 

“You can’t scale up the number of contractors and number of builders immediately,” she said.

Most of the victims will still live nearby. A disaster like this in any metro area would be horrible, said Jay Lybik, director of multifamily analytics at CoStar.

“But given that LA is one of the most underhoused metros in the country, it makes things even worse,” he said.

Lybik said in particular, Los Angeles County has one of the lowest multifamily vacancy rates in the country.

“The big question now is what’s going to happen to rents, and this is, to me, the 800-pound gorilla in the room,” he said.

Lybik said rents could jump 6%, 7% or even higher.

In the longer term, these homes will get rebuilt, and Daniel Cabrera believes there will be plenty of demand for them. He founded a company called Fire Damage House Buyer that buys damaged property as is if owners don’t want to move back.

“We’ve bought, I can’t even tell you how many fire-damaged properties in the past, and we’ve sold every single one,” he said.

Cabrera said that’s especially true for the Pacific Palisades, where wealthier residents can afford the higher insurance premiums that come with the fire risk.

“I don’t think their property values, even with these wildfires, are going to go anywhere. I think they’re going to remain right where they’re at and they’re going to continue to rise, because it’s just such a sought-after market,” he said.

And the state is facilitating that too. California has prohibited insurance companies from canceling policies on homes near the fire to make sure victims get payouts to move or rebuild.