For some L.A. wildfire survivors, rebuilding will not be an option

LOS ANGELES — As work crews race to clear debris from thousands of homes and businesses destroyed in last month’s wildfires, residents are grappling with whether they can afford to stay in a region where real estate prices were already out of reach for many people.

Displaced homeowners and renters are facing an economic landscape rife with long-standing affordability and equity concerns, illuminating the gulf between those who can afford to start over from scratch and those who cannot.

“It’s intimidating,” said Kaitlyn Little, who grew up in Pacific Palisades, one of hundreds of distinct neighborhoods that make up the city of Los Angeles. “It just reinforces the feelings of uncertainty and uneasiness about what the future of that town really does look like.”

Little lost the Palisades condominium she shared with her husband and their 2-year-old child in the Jan. 7 fires that razed entire communities. At least 29 people were killed in the multiday siege, and more than 16,000 structures, the majority residences, were destroyed.

Now, Little finds herself in a market where the average home price in Los Angeles County is just shy of $1 million and the average rent is nearly $3,000, according to Zillow. State and local leaders have warned against price gouging, but displaced families said they are already feeling the pinch.

At this point, Little said, she cannot afford to rebuild, much less buy a home.

“Our renters insurance doesn’t begin to cover the cost of what was lost,” she said.

Like many survivors, Little did not have time to pack before evacuating. She ran out of the condominium she rented with the clothes on her back and three diapers. She thought she would return home in a few hours.

After completing seemingly endless paperwork, Little received a $16,000 payout. She is attempting to stretch that out to cover moving into a new apartment and buying new clothes and essentials for her family of three.

She yearns to return to the Palisades after it is rebuilt, but worries that rising rents could force her and her family to relocate permanently.

“Going back is the dream, but there are so many factors at play,” she said. “What does it look like a year from now and how are the schools going to be?”

Economic losses reach $250 billion

Early estimates of the total economic loss from the fires have soared to $250 billion. According to a recent economic impact study by the University of California, Los Angeles, areas near the burn zones could suffer wage losses of nearly $300 million because so many businesses were destroyed and few customers are around to patronize those that survived.

The study also confirmed what most people already knew: The housing market will become more unaffordable in coming years, and rentals, already in short supply before the fires, will become even pricier.

“The reduction in the supply of housing is going to raise prices,” said Adam Rose, senior research fellow and director emeritus of the Center for Risk and Economic Analysis of Threats and Emergencies at the University of Southern California. “The only thing that’s going to offset that is if people move elsewhere.”

State and local leaders have expedited recovery efforts by waiving permits and lifting some environmental regulations. But the rush to rebuild is already leaving some survivors in the dust.

“This is gonna be a long, tough, difficult road,” said Altadena resident Freddy Sayegh, whose extended family lost a total of seven properties in the Eaton Fire.

“What we don’t want is unscrupulous developers coming in here trying to build and make a profit and increase the home prices, decreasing the ability to have affordable housing.”

In the weeks since the fire, Sayegh, his wife and two children have bounced from one short-term rental to the next. He now drives more than an hour to drop his kids off at school and continues to look for a house or apartment to rent that he can afford. His law office was badly smoke damaged and several businesses owned by his family, including an auto parts store and a gas station, were destroyed, he said.

His homeowners insurance payout will cover smoke remediation, a timely and painstaking process to remove toxic particles and soot from his ranch-style home. But his commercial properties near north Lake Avenue, a busy thoroughfare consumed by the fire, were underinsured and Sayegh anticipates his payout will not be enough to rebuild.

While he waits to meet with adjusters to determine how much he will receive, Sayegh is helping to organize a coalition of Altadena residents and businesses that will work to make the rebuilding effort affordable and attainable for longtime community members. The group will operate like a labor union, negotiating with builders and architects for the best prices on large-scale construction projects, he said.

Altadena resident Maria Shufeldt said the homeowner-focused effort may not do much to help her. The building where she rented an apartment for 13 years withstood the flames but was badly damaged by smoke. She shuffled through three different hotels as she hunted for a rental.

She spent much of Thursday afternoon speaking with the Red Cross and the Federal Emergency Management Agency in hopes of extending her hotel stay until her new apartment is ready. The whole recovery experience has left her numb and exhausted.

“It completely makes you almost not able to function in real life, because you’re constantly dealing with what’s next,” she said.

‘Death of the American dream’

Even homeowners in tony Pacific Palisades face displacement. Blake Mallen, an entrepreneur, lived in a home valued at more than $3 million near the trailhead where the Palisades Fire was first reported. The five-bedroom, five-bathroom home was paid off in full, but Mallen was one of some 1,600 Palisades residents dropped by their homeowners insurance companies last year amid soaring costs and an increasing risk of wildfires.

He attempted to supplement his homeowners insurance through California’s FAIR Plan, the state’s insurer of last resort, but was told he did not qualify because his home value was too high.

Without insurance, Mallen has been unable to recoup losses.

“This is the death of the American dream,” he said. “We’re seeing the core of our community fragment.”

Mallen has spent much of the past five weeks on the phone with lawyers, hoping to find a loophole that will make him eligible for some kind of payout. For now, he is facing a total financial loss, he said. His home of seven years was not just where he and his wife raised their two children, it was their entire nest egg.

“Right now, we couldn’t even rebuild if we wanted to,” he said, speaking from his rental house in L.A.’s Venice neighborhood. “Do I even want to rebuild a house that can’t get insurance?”

Residents who can afford to rebuild also face uncertainty as tariffs and inflation threaten to increase the price of materials.

In Sunset Mesa, near Pacific Palisades, longtime resident Tom Reed said he plans to start construction to replace his destroyed home as soon as possible and is already negotiating the cost of an architect. Reed has carefully mapped out rental costs for the next three years to help stay within the budget dictated by his insurance payout. He and his wife are even renting furniture for their temporary apartment, instead of buying.

While forging ahead, he said he knows some items lost in the fire can never be replaced. The amateur photographer estimates he lost some 100,000 negatives and photos when the Palisades Fire tore through his oceanside community.

“As I tell people, you can’t look back. Let’s just look forward and keep going forward,” he said. “That’s all you can do.”