Los Angeles Fires Put Up to $40 Billion of Residential Real Estate at Risk

The recent wildfires in Los Angeles County put more than $40 billion of real estate value at risk, according to a new report from the Realtor.com® economic research team.

Since the Eaton and Palisades wildfires started on Jan. 7, their boundaries have expanded to encompass more than 15,800 residential properties, with a total value of $40.3 billion.

The median home within the boundaries of the Eaton fire has an estimated $1.3 million value, while the typical home in the Palisades fire boundary has an estimated value of $3 million. 

The L.A. County median home value is somewhat lower than both of the affected areas, at $870,500.   

It’s worth noting that not every home within the perimeters of the fires was necessarily destroyed. As well, a substantial share of total property value in Los Angeles is in the land itself, meaning that a home reduced to rubble could still sell for millions based on the lot value alone.

The reconstruction cost of all properties within the fire perimeters, including commercial properties, is estimated by CoreLogic to exceed $13 billion.

The new analysis shows the immense scale of devastation and the rebuilding task ahead. Although largely contained, the two fires are still burning.

The residences within the Eaton and Palisades fire boundaries comprise 0.9% of Los Angeles County residential properties by number and account for 2% of the total value of properties in the county.

So far in 2025, about 100 homes have been listed for sale within the Eaton and Palisades fire boundaries, the new analysis found.

Those listings in the at-risk areas account for about 1.3% of all active for-sale home listings so far this year in L.A. County, slightly higher than the area’s share of overall residential housing stock.  

L.A. was already experiencing a housing shortage

Over the past decade, new household formation in the Los Angeles metro area has outpaced single-family home construction by more than 2-to-1, the new analysis found.

Between 2013 and 2023, the area added roughly 290,000 new households, but issued only about 107,000 single-family building permits, a gap of nearly 200,000 homes. 

The gap is possibly wider than the data suggests, as limited housing supply and high housing costs deter new households from forming, the study notes. 

Growth in apartment rentals has helped offset the shortage of homes. In the past decade, roughly 220,000 multifamily permits were issued, adding significant rental inventory to the L.A. market.  

Still, limited supply and robust demand for housing in L.A. has kept competition fierce and home prices high. 

The median list price per square foot has climbed in L.A. throughout the data’s history (back to mid-2016). In 2024, there were roughly 36.1% fewer homes for sale in L.A. compared with 2019.

Displacement from fires expected to put strain on rents

Rents in the Los Angeles metro area in December were already the fourth highest in the country, behind New York City, Boston, and San Jose, CA. 

The median asking rent for a 0-2 bedroom home in L.A. was $2,750. That figure was down 2.7% from a year ago, and asking rents have seen weak growth in recent years due to a steady supply of multifamily completions.

Consistent with weaker rent growth, rental vacancy was 5.9% in the third quarter of 2024, its highest level in 10 years. 

Slack in L.A.’s rental market will help accommodate those displaced by the fires—but due to the scale of new demand for living space, rents are likely to increase.

So far this year, 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.