Wildfires engulfing Los Angeles are likely to exacerbate the region’s housing affordability crisis now and long into the future, housing analysts and advocates said.
Rents will increase, especially near the epicenter of massive fires around the Pacific Palisades and Altadena. Those planning to rebuild their homes will face intense competition for contractors. And impacts on wavering home insurance markets could lead to greater costs for all Angelenos.
“It’s immediate,” said Stuart Gabriel, director of UCLA’s Ziman Center for Real Estate, on the effect of mass displacement pushing up housing costs. “It’s difficult to quantify. I don’t think anyone knows what the numbers are.”
While the destruction represents a small percentage of Los Angeles County’s 3.7 million homes, the consequences are significant on available supply and likely to worsen as fires continue to burn with little to no containment. As of Thursday afternoon, fire officials estimated that more than 9,000 single-family homes, apartment complexes, businesses and other structures have been destroyed in the Palisades and Eaton fires. For comparison, 24,300 homes, including units in apartments and condominiums, were granted building permits in L.A. County in 2023, the last full year of available U.S. census data.
Larry Gross, executive director for the tenant rights group Coalition for Economic Survival, said he’s worried about thousands of relatively well-off refugees being forced into the region’s tight rental market.
He said some landlords would probably try to take advantage of the situation by jacking up rent and evicting tenants in favor of displaced homeowners who could pay more. State price-gouging rules are supposed to prevent such situations, but Gross said more must be done to ensure enforcement.
“We need to be thinking out of the box,” he said. “Both state and city officials need to take action to ensure that this crisis isn’t multiplied by profiteers.”
Analysts said the fires will add a myriad of stressors to L.A.’s housing challenges, many of which were already at risk of worsening. More than 65,000 homeowners in Los Angeles had their insurance policies not renewed in the last five years, and state officials were hoping new regulatory changes would lure insurers back to high-risk areas. Facing huge losses from the fires — initial estimates have topped $50 billion in damages — companies could stay away or raise premiums not just for rebuilding homeowners and landlords, but others across the region, said Richard Green, director of the USC Lusk Center for Real Estate.
“Who knows what the insurance companies are going to do in the aftermath of this,” Green said.
Rebuilding homeowners will face further difficulties vying among a constrained supply of contractors and dwindling construction labor force — key factors keeping L.A.’s housing production low before the fires, he said.
“We don’t have enough already,” Green said. “That’s been one of our problems.”
To get people into new homes, Gabriel said, the city of Los Angeles will need to revolutionize its lengthy permitting processes for development, which should have been a pressing demand even before the fires.
In 2023, he co-wrote a study showing it took nearly five years to complete the average unit in a multifamily building, with a substantial portion of that time related to bureaucratic approval.
“These homeowners and the city cannot afford to wait five years for these homes to be rebuilt,” Gabriel said.
He called on Mayor Karen Bass and the City Council to create a streamlined approval process for wildfire-affected homeowners, and then use it as a model to change the entire system.
The devastating fires have made fixing the city’s housing problems harder but no less essential, Gabriel said.
“If the city of L.A. wants to stay competitive with so many other metropolitan areas both domestically and around the globe, the critical imperative is to deal with the availability of affordable housing,” he said. “If the city fails in that regard, it’ll be yet another reason for households and businesses to look elsewhere.”
Times staff writer Andrew Khouri contributed to this report.
