Why Pacific Palisades Is Unique in Wildfire Recovery
In response to our ASK US TO COVER A TOPIC section, an owner requested some guidance on what may be a “low-ball offer” on his parcel of land.
While one can explore how wildfires have typically impacted different real estate markets based on historical patterns, none of them are very comparable to Pacific Palisades.
One reason is that most of the infrastructure has been damaged and may take a few years to be rebuilt.
Lessons from Past Wildfires
For example, one could consider the Woolsey and Tubbs fire statistics, a recent UCLA Anderson School of Management study of the Palisades Fire, and an ICMA (International City/County Management Association) Disaster Case Study.
The Fountaingrove area of Santa Rosa provides an interesting case study of wildfire recovery after the October 2017 Tubbs Fire. This fire destroyed approximately 5,636 structures and 36,800 acres. Here’s what the data shows about its market value recovery.
Immediately after the fire, vacant lot prices dropped 30-40% from pre-fire values. After 12 to 18 months, lot values began stabilizing, but remained 15-25% below pre-fire levels. By 2-3 years later, rebuilt homes were selling at or above pre-fire values. By 3-4 years, the neighborhood saw a significant surge in value, driven by new construction quality, updated building codes, modern amenities, and improved fire safety features.
In comparison, the November 2018 Woolsey Fire had significant but complex effects on Malibu land values. The fire destroyed approximately 488 structures in Malibu and burned nearly 97,000 acres across Los Angeles and Ventura counties.
The immediate impact (0-6 months) was that raw land values in burned areas initially decreased 15-20% on average and that properties with intact structures maintained relatively stable values. However, severely burned neighborhoods saw temporary 20-30% declines in total property values. Some oceanfront properties retained their values despite nearby fire damage.
The medium-term trend (6-18 months) was that land values began recovering by mid-2019. Some burned lots sold at premiums due to new building opportunities. Areas with improved fire mitigation infrastructure saw faster value recovery. Properties with ocean views maintained stronger values throughout recovery.
While the Woolsey Fire caused significant short-term disruption to Malibu’s land values, the market demonstrated remarkable resilience. The area’s inherent desirability, combined with improved building standards and fire safety measures, helped stabilize and eventually restore property values.
“Areas impacted by the Woolsey and Thomas (Ventura & Santa Barbara in 2017) Fires, which boast prime locations with stunning views of the Pacific Ocean and mild weather, share similarities with Pacific Palisades, affected by the Palisades Fire. Therefore, historical trends suggest that home values in Pacific Palisades could continue to rise over the long term.”
Comparing Pacific Palisades to Other Fire-Affected Areas
As one may have noticed, there are already a handful of parcels listed for sale in Pacific Palisades, a couple are listed below where one would expect despite being within weeks of the disaster, and others are closer to what one might “feel” would be closer to actual value.
The bottom line is that post-fire valuation in Pacific Palisades appears to be more of an art than a science.
Many believe that for those not rebuilding, holding a parcel would be the financially sound approach. We have been in conversation with countless owners who are evaluating their options, considering their differing insurance coverage, and for some, it may not necessarily be the best decision. We welcome the opportunity to assist you in evaluating your options in these highly unusual times.
We are of the strong belief that once the infrastructure is rebuilt and even if the character of our Palisades may have been somewhat altered, we will return strong and carry on the legacy of the Methodist Episcopal community which settled in the Alphabet streets and the Boomers who golfed in the Country Club and established the Riviera. We are therefore looking forward to carrying on such traditions as our Fourth of July Parade, the Menorah lighting and hosting of the PGA open with the same pride we have always had in our village by the sea.
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