California Wildfire Recovery: Corporations Lead Land Sales Amid Homeowner Struggles
Six months after the Southern California wildfires, recovery efforts show mixed progress as corporations and investors rapidly acquire land in affected areas, while homeowners face prolonged insurance settlements and high rebuilding costs. Although permits are being approved faster than before the fires, many residents struggle with financial burdens and regulatory hurdles, highlighting the uneven recovery process.
Real estate agent Laura Alfano notes that the market is shifting dramatically, with corporations and investors purchasing both damaged homes and entire lots. In the Palisades, half of the 123 lots sold since the fire have been acquired by corporate entities, while the remainder have gone to private individuals. In Altadena, investors are actively snapping up properties, with one company buying 16 and another acquiring 13. Meanwhile, homeowners like Terry Kilgore, who is living in an RV on his Altadena lot, are waiting for insurance settlements that may never cover the full costs of rebuilding.
Financial barriers are significant, as many homeowners find themselves underinsured. The inability to afford existing mortgages, combined with the high cost of living in a tight market, leaves many without the means to rebuild. In Altadena, the increasing number of vacant lots has led to a price drop of up to $100,000 on a $1 million lot. Conversely, in the Palisades, fewer properties are coming on the market, with the average price for a vacant lot reaching $2.2 million.
Despite efforts to streamline the approval process, regulatory hurdles remain a significant obstacle. The city and county of Los Angeles have approved 274 permits for construction, but delays persist, especially for larger or more complicated sites. Governor Newson’s extension of the executive order to suspend the California Coastal Act as the primary agent in granting permits aims to expedite rebuilding, allowing for up to a 10% increase in home size. However, those looking to expand beyond this limit face a $11,579 base fee and a lengthy process. Ross Greenberg, who lost his home in the Palisades fire, highlights the financial and regulatory challenges, having already spent over $12,000 in permit fees just to begin the rebuilding process.
Insurance companies have also come under scrutiny, with State Farm dropping 1,600 policies in the Palisades last July. Homeowners are challenging the company’s response, claiming they were left grossly underinsured. The California FAIR Plan, which provides coverage for foundational and septic tank development, offers limited relief for residents in areas like Malibu, where 600 homes, including 300 along the beach, were lost. Real estate consultant Don Schmitz emphasizes that the cost of just the foundation, septic system, and seawall can exceed $2 to $3 million, making the rebuilding process financially daunting for many.