How the LA Fires will Impact South Bay Los Angeles Real Estate

The beginning of 2025 will be remembered like no other.

For Many Southern Californian's, life will never be the same.  My heart goes out to all of my fellow Californians as we struggle to navigate our way through this horrible tragedy of epic proportions.

The Wildfires have devastated the area in multiple areas including the Pacific Palisades, Malibu, Alta-dena, Eaton Canyon, Pasadena as well as areas where the fires are (as of this post) just beginning out in the Valencia area.  The total devastation, cost and plans for redeveloping these areas and neighborhoods will be agonized over for the foreseeable future.  As a local Real Estate Broker, that mostly focuses in areas that were NOT directly impacted by the fires, many people are wondering what will happen to the local market?

The answers of course are quite simple.  It is not going to be easy and it will be very expensive.  Most people and families will likely each have personal stories of what they are going through and will go through as they begin to try to re-establish their lives.  As a father of two teens in high school, I can only imagine what this disruption must feel like.  Especially for those that have lost not only their homes but all of their personal belongings, clothes, furniture - stuffed animals... The thought is almost too much to bear.

Getting back to the reality of how this may impact the local Los Angeles and by extension Orange County Real Estate markets is rather easy to predict.  Most of these areas have seen a steady decline in 30-day inventory over the past couple decades.  Before the fires took place, it was not as if there was a plentiful amount of inventory.  Removing entire zip codes worth of homes totaling in the 10's of thousands can only do one thing; a reduction in supply and in increase in demand will result in high prices and few homes for families to choose from.

Specifically in the South Bay - Manhattan Beach immediately began receiving calls for leases and homes for sale.  Homes that had been sitting for months received multiple offers almost overnight and as of this writing are now in escrow.  That accounted for a couple dozen families.  The rest were out of luck and left to find shelter with friends, family and less desirable rental and leases.  Thus, forcing ultimate pressure on the value of things.  Now that we are about a week or so into this "new normal" - I have heard of communities scheduling workshops for families to come at a specific day and time to find out about the schools and resources available.  Newport Beach has already scheduled an event like this for the coming days.  

Manhattan Beach, Redondo Beach, Torrance and other communities with their own school districts are heavily sought after by those displaced.  My assumption is many of them are simply trying to find a new community to get their kids back to school in, so that they can try to resume some semblance of a normal life as they deal with the reality of losing a home, neighborhood and all personal belongings.

In general, since each family will go the direction that is best for them, they are migrating every direction.  Not all will stay in Southern California.  Some will leave for a short time and attempt to return in the future once they are able to begin making sense of the insurance and mortgage responsibilities.  As a result, there is no standard or uniform way that this migration is happening.  Each person I know basically knows of friends or family that are going through this and they are all trying to help and support as much as they can.  

Getting into a more analytical review of the situation - in short, we have found ourselves in a rare, New Year's Seller's market.  Supply is super low and most good options are now off the table.  For any home owners that have considered selling their home in Southern California, the South Bay, West LA, the Valley and surrounding communities, now may be the best Winter we have seen in a very long time.  Especially for those in good school districts and with homes that under normal circumstances may be more challenging to sell (busy streets, bad neighbors, traffic, etc.). 

The supply is now even lower and the prices are heading up.  Unlike rental units, the value of the properties will continue to rise as the demand remains strong.  I would anticipate that if the new Administration puts emphasis on lowering Interest Rates, this will further put more upward pressure on prices and values.  Not only making things more expensive but also continuing to limit the total amount of supply that is available of homes to buy.  Word travels fast. Home owners do not want to list their home For Sale just to let it sit on the MLS.  Therefore, those that want to sell are motivated.  Those that do not believe they can find a suitable replacement at a price they are comfortable with - are going to hold on to (in some cases) very low interest rates on their mortgages from refinancing a few years ago.  

The reality is that Buyers and Sellers are now in a completely different mindset than ever before.  As a result, their priorities, expectations and things they may accept about a home have changed dramatically. 

Your home, may be EXACTLY what they are looking for.

If you would like to discuss your options or would like a comprehensive market analysis of your home or any neighborhoods - please contact me directly.  

From our family to all of those impacted by this unbelievable trajedy we share our love and support for you and please contact me directly if I can be of assistance.  A heartfelt and sincere thanks to all of the first responders and individuals who have assisted and offered help and support during this event.  

Matthew Hoffman