As a California real estate agent, you need to understand how the LA fires affect the housing market throughout the region. Your clients will look to you for insights on market shifts, insurance, prices, and inventory.
While the goal of this article is to discuss the effect of California fires on the housing market, let’s not forget that 28 people died in the historic fires that devastated the Palisades, Eaton, and Hughes neighborhoods of L.A. This loss of life is a tragic reminder of the real human impact behind these disasters.
Key Takeaways
- Rising Prices & Reduced Inventory—Wildfire destruction has tightened the housing supply, pushing median home prices up 12.5% YoY to $1,069,000. However, expedited cleanup efforts may help stabilize inventory faster than in past fires.
- Insurance Challenges—Stricter policies and rising premiums make securing home insurance more difficult. Insurers face billions in wildfire-related losses and are pushing for regulatory changes.
- Regulatory & Rebuilding Efforts—Governor Newsom’s orders fast-track permitting and tax relief to speed up reconstruction. Temporary housing solutions like ADUs and mobile home parks support displaced residents.
- New Market Dynamics—Buyers may find opportunities in fire-affected areas but face higher rebuilding costs. Demand is shifting toward lower-risk neighborhoods, impacting home values.
What You Need to Know When Working With Survivors of the L.A. Wildfires
The 2025 LA wildfires burned 50,000 acres, and insurance payouts are estimated at $40 billion. According to a February press release from California Governor Newsom’s office, federal and state crews have completed 99% of hazardous debris cleanup, and affected areas will soon be ready for reconstruction.
Here’s what else you need to know about the L.A. wildfires, rebuilding, and real estate practices.
Regulatory changes to speed up rebuilding
- Governor Newsom issued executive orders cutting red tape for home and business reconstruction.
- California Environmental Quality Act and California Coastal Act permitting requirements are suspended for fire-affected properties.
- Expect a faster permitting process, making rebuilding easier for homeowners.
Tax and mortgage relief for homeowners
- The state extended tax deadlines and postponed penalties on late property tax payments for one year.
- Mortgage relief programs are in place for fire-affected homeowners in specific zip codes.
- New legislation aims to allow homeowners to keep interest accrued on insurance payouts.
Temporary housing and tenant protections
- There is streamlined approval for accessory dwelling units (ADUs) and mobile home parks to provide temporary housing.
- Landlords are prohibited from evicting tenants who are housing displaced fire survivors.
Safeguarding against predatory real estate practices
- An executive order protects fire survivors from predatory land speculators making aggressive cash offers.
- Real estate agents should advise clients to be cautious of unsolicited purchase offers.
Disaster assistance and resources
- Fire survivors may qualify for financial relief, temporary housing, and food benefits through state and federal programs.
- Agents should guide clients toward official resources like CA.gov/LAfires for recovery support.
The Impact of the California Fires on the Housing Market
It may take some time to get an accurate picture of the impact of the California fires on the housing market. However, the current snapshot of the LA market shows rising prices and reduced activity.
According to Redfin, the current median sale price in Los Angeles is $1,069,000, up 12.5% year over year. The number of homes sold in March 2025 was 1,080, down 3.7% year over year.
According to Gov. Newsome’s press release, the expedited cleanup and regulatory relief efforts will help with rebuilding efforts and may stabilize the inventory faster than in past wildfires.
While buyers may see more opportunities in affected areas, insurance and rebuilding costs could still impact affordability.
Also, advise your clients to expect price fluctuations as demand shifts between fire-prone and safer neighborhoods.
The Role of Insurance in the LA Housing Market
Clients looking to buy or rebuild in fire-affected areas should be aware of increased insurance costs and stricter policy requirements. However, it’s worth noting that insurance companies must operate under Proposition 103, enacted by former Gov. Ronald Reagan. The law allows homeowners’ insurance premiums to go up no more than 6.9% without a public hearing.
Insurance companies say it’s time for a policy change. According to an article on MSN’s website titled “L.A. Has Big Plans to Rebuild After the Fires. Good Luck Getting Insurance,” the most recent fires cost insurer State Farm $7.9 billion.
What Real Estate Agents Need to Know About Working in LA’s Challenging Market
Like any other industry, real estate has its ups and downs, and you’ll need to learn how to adapt to a challenging market. Here are some insights on working with buyers and sellers in L.A. in the spring of 2025.
- Be prepared to educate clients on rebuilding timelines, regulatory changes, and tax relief options.
- Advise buyers on insurance considerations and the potential risks of purchasing in fire-prone areas.
- Help sellers understand the true market value of their properties and protect them from opportunistic investors.
- Stay updated on government relief programs that may impact financing and affordability.
Adapting to Market Changes: Strategies for Success
As a real estate agent, staying informed about market changes is crucial. Understanding market dynamics will help you guide your clients effectively—whether they’re looking to buy in high-risk areas, seeking fire-resistant home features, or navigating insurance and rebuilding challenges. By staying ahead of these trends, you can provide valuable insights that position you as a trusted advisor in California’s ever-evolving real estate landscape.
More than ever before, L.A. residents need the assistance of qualified, caring agents to assist them with their real estate transactions. Learn how to get your license and enroll in pre-licensing courses today with Allied Schools. Allied Schools offers self-paced and instructor-led courses you need to get your California real estate license. Plus, we offer the Pass or Don’t Pay Guarantee, which offers a further incentive to choose Allied as your real estate school.
