By Charles Switzer
1:11pm PST, Feb 12, 2025
The Dilemma of Rebuilding or Selling
Homeowners in Los Angeles County who survived the devastating
January wildfires now face an impossible decision: rebuild their homes at significant personal cost or sell their properties at a major financial loss.
Some, like the owner of a four-bedroom
Pacific Palisades home, have chosen to sell. The burnt remains of her house, which had been valued as high as $2.7 million dollars, were put on the market for $999,000 dollars and quickly went into escrow for over $1 million dollars after receiving more than 60 offers.
Many homeowners are now grappling with whether they can afford to stay in the area or if selling at a loss is their only viable option.
Here's what's happening.
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The Devastation Left Behind
The wildfires destroyed over 12,000 structures across Los Angeles County, including thousands of homes from early to late January. A
Redfin report from January 16 estimated that 6,354 homes were affected within the perimeters of the Palisades and Eaton fires, with 5,449
completely destroyed and 905 significantly damaged.
The majority of these properties were single-family homes, leaving their owners in a precarious financial situation. While some will be able to rely on insurance to cover rebuilding costs, many are discovering they are either underinsured or not covered at all, forcing them to make tough financial decisions about their future.
A Changing Real Estate Market
A Pacific Palisades home that recently sold for $1 million dollars was once worth nearly three times that amount and similar steep price drops are appearing across the market. In Altadena, a 9,100-square-foot lot where a house once stood is now selling for $449,000 dollars — less than half of the $965,000 dollars it sold for just last year.
While some homeowners are holding onto their properties, others are eager to sell and move on, fearing future wildfires.
"People selling are going to take a huge financial hit," said Richard Schulman, the selling agent for one fire-ravaged home.
The Struggles of Rebuilding
Rebuilding in Los Angeles County will be an expensive and difficult process. Many homeowners will need to take out additional mortgages or dip into home equity to cover construction costs.
"People in Altadena can afford to rebuild only a fraction of the homes they lost," said Nancy Wallace, a professor at UC Berkeley.
Additionally, strict building codes will require new homes to meet modern safety standards, further driving up costs. Some families, like homeowner Terri Bromberg, have already decided to relocate, saying the trauma of the wildfires is too much to bear.
"My daughter said she doesn't want to go back and live in the hills. It was too scary," Bromberg shared.
The Long-Term Impact on Housing and Insurance
Housing experts predict that while L.A. County will eventually rebuild, the market will see higher home prices and increased competition due to limited supply. Many expect property insurance premiums to skyrocket as insurers adjust to the growing frequency of extreme weather events.
"If that frequency continues to increase, even if property values drop, I think we're going to see property insurance premiums increase," said
Chris Schafer, an insurance industry expert.
As rebuilding efforts begin, the housing market is expected to tighten with
"little to no help" from L.A. officials, pushing more people out of the city in search of affordable alternatives.
