It’s been just over a week since historic wildfires started in Los Angeles, and though fires are still blazing, people who lost homes are already swarming the housing market.
“It’s a frenzy,” Mauricio Umansky, CEO and founder of Beverly Hills-based brokerage The Agency, said in an interview.
The largest of the fires, the Palisades Fire, has been burning since the morning of Jan. 7, according to the California Department of Forestry and Fire Protection. As of Thursday morning, it had burned nearly 24,000 acres and was just 22% contained.
In its path, the blaze destroyed nearly 3,000 structures and damaged another 500, many of which were in the Pacific Palisades neighborhood, Cal Fire data showed.
Now, displaced residents are seeking to replicate the lifestyle they once knew. So they're heading to the nearby Southern California cities of Santa Monica and Brentwood to find housing, in most cases in rental properties.
Already, that movement is putting upward pressure on prices and supply, and concerns have emerged about the viability of a major migration, according to Jason Oppenheim, owner of West Hollywood-based The Oppenheim Group.
“Ninety percent of our clients who lost their homes in the Palisades are trying to lease in Santa Monica and Brentwood,” he said, “and I’m just not sure it’s going to be feasible.”
Prices climb higher
Residents of the Pacific Palisades area, where the average home value is in the $4 million range, are, for the most part, shopping the luxury market now, said Oppenheim. His brokerage is offering free representation for anyone who has lost their house and has been displaced.
Before last week, the Pacific Palisades neighborhood nestled at the foothills of the Santa Monica Mountains was known for its secluded cliffside houses with spacious yards, according to Homes.com. Its streets were lined with Spanish Revival mansions, midcentury modern ranchers and historic buildings, including the Getty Villa museum.
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Many of those residents are seeking leases as they await their fates, whether that means rebuilding or buying elsewhere. “They’re desperate,” Oppenheim said.
The surge in demand for luxury living comes as the housing market in greater Los Angeles is already under pressure from limited supply and high prices. But in the luxury market, there’s the added disruption of the nearly two-year-old “mansion tax," or tax increase on property sales of at least $5.15 million.
Oppenheim said that disruption, combined with the pressure from residents seeking a place to live, is already forcing prices up.
“Almost everyone is willing to overpay,” Oppenheim said. “It’s just a really complicated situation. I have clients offering 50% more than asking.”
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Angela von Detten, an agent specializing in Pacific Palisades and Santa Monica, said she’s seen similar demand among her clients. Many of them are willing to offer more than the list price and pay for a year or two of rent in advance in cash, von Detten said.
“We are seeing some properties with multiple applications, sight unseen,” she said in an interview. “At this point, clients are looking for either furnished or unfurnished. Really, they just need to get a roof over their heads.”
That’s drastically different than the way things looked even a month ago, especially because of the holidays.
“It’s night and day,” von Detten said.
Referring to a listing in Santa Monica, she said, “It was crickets last month, and now this owner is getting multiple bids for rental and offers for purchase.”
Supply problem
There’s also the issue of supply. Some agents are already expressing concerns about the availability of housing, especially in hot spots like Brentwood and Santa Monica.
“It’s just not feasible,” Oppenheim said. “They’re going to have to start looking in geographic areas that maybe they didn’t want to consider.”
As of Thursday, there were just 37 properties listed for rent in Brentwood on Homes.com. In Santa Monica, there were 375 options.
Of course, some residents are already considering different neighborhoods near Los Angeles, von Detten said. Some of her clients have already opted to move to Palm Springs, Orange County, Santa Barbara or Newport, she said.
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Others are taking more drastic states and leaving the state altogether, even if they didn’t lose their properties, according to Umansky of The Agency.
“Nobody who lives in Los Angeles hasn’t been touched by this,” he said.
