The fires that decimated the Pacific Palisades and Altadena neighborhoods of Los Angeles in early January displaced thousands of residents who have pushed demand for California's luxury coastal housing even higher. Virtually all two-bedroom rentals from Santa Monica and Marina del Rey to Manhattan Beach have been leased. Demand for housing also spiked in nearby Brentwood, Bel Air and Beverly Hills.
As some residents of the Pacific Palisades have sought refuge down the coastline, Newport Beach in Orange County has emerged as a highly sought-after landing spot, according to residential brokers, since it shares many similarities with the tony Los Angeles enclave. Known worldwide as the picture of a high-end seaside community, Newport Beach lives up to its reputation with cliffside mansions overlooking the Pacific, an idyllic coastline and famous piers, per Homes.com. Home values are comparable in both coastal areas.
While Newport Beach is more densely populated, it is similar to the Palisades in offering residents a safe, upscale beachfront community with an abundance of recreation and entertainment opportunities and highly rated schools. Educational attainment, household income and homeownership rates are far above the national average in both areas.
More widely, Orange County already ranked among the areas seeing the highest increase in home prices in the U.S., with the median up 12% year over year. The Los Angeles wildfires will only increase demand across the Southern California region, amplifying the trend of people moving out of Los Angeles and into Orange County, further exacerbating the region's already tight housing availability.
Apartment vacancy in Los Angeles County ranks as the third lowest in the nation at 5.2%, well below the 8% national average. Orange County apartments have even less availability, with vacancy trending at 4.1% and only 2.1% in Newport Beach.
The wildfires could increase apartment demand in Orange County, although most residents moving from the Pacific Palisades to Newport Beach are likely seeking single-family houses to replace those lost to the fires.
Rental options are thin throughout Southern California, and construction will provide little relief in the near term as housing development sites are quite limited in infill markets. On a relative basis, apartment construction falls far below average in Los Angeles and Orange County, and lawmakers are clamoring to cut red tape to hasten rebuilding efforts in the burn zones.
But with realistic construction timelines stretching as long as five years, many are seeking at least semipermanent housing solutions nearby. Newport Beach is a fair distance from the Palisades and Los Angeles, but the commute may be manageable for some in the trade-off for housing.