We remain deeply saddened by the destruction caused by the wildfires and stand with our fellow Angelenos who have lost their homes, belongings, and cherished memories. With so many resources being circulated, we've created a post to put everything (that we can think of) into one place: L.A. Wildfire Resource Guide.
As we come to grips with what's happened, questions will arise about the long-term effects on the L.A. real estate market. Here's what we know so far and what might happen next.
Homeowner's Insurance
There is a moratorium on new insurance policies being issued until the fires are 100% contained and there are no active fires within a 35-mile radius. This means that anyone currently buying a home can only use the California Fair Plan to receive fire insurance. As soon as the moratorium is lifted, those buyers can switch to another plan.
There's also a moratorium on non-renewals and cancellations to protect those affected by the recent fires. You can head here to see if your zip code is included in the moratorium.
A bigger question surrounds insurance in California, and we'll know more about that in the coming weeks and months. However, one thing seems certain: unfortunately, our insurance premiums will be going up.
Will Home Prices Fall?
Overall? Not likely. In fact, homes are expected to rise at a more typical pace of 3-4% over 2025.
The fires will impact the prices within the burned areas due to the thousands of homes tragically lost, thus literally reducing the supply of homes that can be sold when demand is already outpacing supply. Plus, people seeking to buy in the affected areas will most likely only have the California Fair Plan as an option for home and fire insurance, which could price people out due to their exorbitant premiums.
California Fair Plan is often much more expensive than people may have traditionally paid to mainstream companies like State Farm, Mercury, or Geico. So, there is a hypothetical scenario where a buyer could comfortably afford to buy a home but not be able to afford the monthly premiums for home/fire insurance.
And we don't know how many will or can rebuild. People who had no insurance or insufficient insurance may be forced to move out of the area entirely, having only their land to sell. Others may not want to go through a protracted 18 to 36-month rebuilding timeline and choose to move on, as well.
It's too early to tell how effective the protections Sacramento is putting into place to help the impacted people from greedy developers. But I'm crossing my fingers that everyone who lost everything in the fires is given every opportunity to rebuild their homes, or at the very least, not feel they were forced to sell to an unscrupulous developer who only wants to quickly build low-quality rentals.
We also have to factor in the people who choose not to rebuild but stay in L.A., who will join the existing group of homebuyers fighting for a chance to own a home. Despite more homes for sale than in previous years, demand still outpaces supply, driving prices up.
And I expect those areas near the fire zones to see even more competition amongst homebuyers as they seek to stay near schools, friends, and familiar amenities they've come to love.
Lease Prices
There has been a flood of new renters seeking unfurnished and furnished rentals in a city with too few units to rent already. Sadly, terrible people will always try to find a way to profit, and numerous incidents of price gouging have been reported. Even if the property is listed at fair market value, potential renters have been offering piles of money to try to secure the property, which is also a violation of the law.
TIP: If you're looking to rent, it's easier to find unfurnished leases than to buy your own furniture, which will most likely be cheaper in the long run. But do the math and see what works best for you.
Will Mortgage Rates Come Down?
Everyone's watching mortgage rates, wondering how much and how quickly they'll drop. However, the Los Angeles fires shouldn't directly impact them meaningfully. And the good news is they're currently expected to ease in 2025. But don't expect them to return to the glory days of 2 - 4%. As Lawrence Yun, Chief Economist at NAR, says: "Are we going back to 4%? Unfortunately, we will not. It's more likely we'll see 6%."
Experts agree rates could settle in the mid-to-low 6% range by year's end, but fluctuations are still possible due to factors like inflation and economic conditions.
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I am happy to answer any questions, so feel free to CONTACT ME at any time. And if you need more in-depth help with mortgages or insurance, I can connect you with several people I work with regularly.
Much love to our L.A. community, wonderful firefighters, first responders, and everyone who has donated or shown up to help. The outpouring of support from our city has been truly incredible. ❤️