Ripples from wildfires’ property damage extend beyond Los Angeles market
We’re still not out of the woods with those horrific Los Angeles-area wildfires. The National Weather Service issued another warning Monday of a “particularly dangerous situation,” with wind gusts of up to 100 miles per hour possible in the mountains and foothills.
To date, the Palisades and Eaton fires have destroyed more than 15,000 structures, a big chunk of them homes. That’s having a ripple effect on the region’s housing market and beyond.
LA real estate agent Lexi Newman helped a lot of homebuyers find their footing in the Altadena housing market in east LA County, where many homes burned down. According to Zillow, the median value there was over $1 million.
“It was, you know, on the more affordable side of things here. And also very lovely, and there’s a burgeoning kind of scene of fantastic restaurants and coffee shops and all types of things,” she said.
Altadena was ravaged by the Eaton fire. Newman has five clients who lost their homes.
The sudden reduction of semiaffordable supply isn’t likely to help buyers in nearby markets like Pasadena or Alhambra.
“We already had an inventory problem and an inventory shortage. So, supply and demand is very possibly going to shift and have housing become more expensive than it already is,” she said.
About 62 miles southeast of Altadena is Moreno Valley, an LA exurb far enough away from the fires to avoid any serious damage.
But local real estate broker Kama Burton expects to see immediate economic fallout. “My biggest concern is the insurance because I believe that’s where the ripple effect will come,” she said.
Burton said homeowners insurance has become so expensive, it’s already a focal point of buyer-seller negotiations, just like closing costs.
Sadly, we do have some precedent for how we can expect the LA fires to impact other housing markets over time.
After the 2017 Wine Country fires in the San Francisco Bay Area, Sacramento real estate broker Erin Stumpf started getting calls from fire victims looking for more affordable options a good 100 miles away from where they used to live.
“Most of the people that I talked to wanted to be in suburbia, where there was low fire risk, definitely far away from any high or moderate fire hazard areas,” she said.
But those low-risk areas are increasingly tough to find.