R
ecent wildfires in Los Angeles County have put over $40 billion of real estate value at risk, according to a new report from Realtor.com's economic research team. The Eaton and Palisades fires, which started on January 7, have expanded to encompass more than 15,800 residential properties with a total value of $40.3 billion.

    The median home within the Eaton fire boundary has an estimated value of $1.3 million, while homes in the Palisades fire area are valued at around $3 million. This is higher than Los Angeles County's median home value of $870,500. Not all properties within the fire perimeters have been destroyed, and land values alone can be substantial.

    The reconstruction cost for all properties, including commercial ones, is estimated to exceed $13 billion by CoreLogic. The fires' boundaries include 0.9% of Los Angeles County's residential properties by number and account for 2% of the total value of properties in the county.

    So far this year, around 100 homes have been listed for sale within the fire-affected areas, accounting for about 1.3% of all active listings in L.A. County. This is slightly higher than the area's share of overall residential housing stock.

    Los Angeles was already experiencing a housing shortage due to new household formation outpacing single-family home construction by over 2-to-1 between 2013 and 2023. The gap is estimated at nearly 200,000 homes, with limited supply and high costs deterring new households from forming.

    The aftermath of the Palisades Fire seen from the coastline in Los Angeles. AP

    Growth in apartment rentals has helped offset the shortage, but competition remains fierce due to limited supply and robust demand. The median list price per square foot has climbed throughout the data's history, with 36.1% fewer homes for sale in L.A. compared to 2019.

    Rents in Los Angeles were already high, at $2,750 for a 0-2 bedroom home in December, down 2.7% from last year. Rental vacancy was 5.9% in the third quarter of 2024, its highest level in 10 years. While slack in the rental market will help accommodate those displaced by the fires, rents are likely to increase due to new demand for living space.

    Traffic on Realtor.com to rental listings in Los Angeles from local residents has surged twice as much as traffic to for-rent listings nationwide so far this year.