LA Rises: Rebuilding to Go Home: A Market-Driven Approach to Recovery After the Wildfires

The Crisis We Face

The devastating wildfires in Los Angeles have left thousands of families displaced, businesses shuttered, and entire communities at risk of permanent decline. History tells us that the biggest threat isn’t the fire—it’s the failure to rebuild quickly and in a way that displaced residents can afford.

With “demands for a fast-track recovery”, neighborhoods are “likely to grow more expensive and exclusive”. The math is simple. Pacific Palisades’ (PP) average household income is $375,000, with the typical home being worth $3.75 million, or 10 times income. Altadena’s (A) average household income is $130,000, with the typical home being worth $1.4 million, or 11 times as much. Yet new buyers in PP and A purchase homes that are 10 and 11 times their respective incomes.

Spoiler alert: Option 3 is only one way to rebuild at about the same price point as before the fire.

Option 1: Rebuild Like for Like. Consider a 1,250 square foot destroyed home built in the 1940s that was valued at $2.5 million and $1 million respectively in PP and A. To rebuild like for like with a similarly sized home would cost an estimated $800,000 and $625,000 (PP and A). Add to that existing lot values of about $2.5 million and $1 million (PP and A). This option presents two challenges. How do returning households afford their newly constructed homes now valued at $3.3 million and $1.625 million (PP and A)? Many displaced homeowners will have seen price appreciation of 130% (2012 buyer) and 170% (2006 buyer), while experiencing an income rise of 60% (2012 buyer) to 65% (2006 buyer). Just as important, it is not economically wise to rebuild a 1,250 square foot home on such a valuable lot, as this would result in severely under improving the lot, limiting its future salability.

Option 2: Rebuild Bigger. Rebuild with 4000 and 3500 square foot homes (PP and A) costing $3.6 million and $1.75 million (PP and A). Add lot values of about $2.5 million and $1 million (PP and A). How do returning households afford homes now valued at $6.1 million and $2.75 million (PP and A)?

Option 3: Rebuild Like for Like on a Smaller Lot. To rebuild a 1250 square foot home would cost $800,000 and $625,000 (PP and A).

• Hypothetical 1: The Pacific Palisades owner agrees to sell the lot to a developer for $2.5 million. The developer is to build three townhomes each with 1250 square feet. From the lot sale proceeds of $2.5 million, the owner purchases one of the three townhomes (valued at $1.633 million) and pays off the original mortgage of say $867,000.  The owner can now afford a newly constructed, fire resistant home valued at $1.633 million.
• Hypothetical 2: The Altadena owner agrees to the lot, to a developer for $1 million. The developer is to build four townhomes each with 1250 square feet. From the lot sale proceeds of $1 million, the owner purchases one of the four townhomes (valued at $800,000) and pays off half of the original mortgage of say $400,000. The owner can now afford a newly constructed, fire resistant home valued at $800,000, financed with a $200,000 mortgage.

We have a short window to act before bureaucratic bottlenecks, red tape, and outdated zoning laws stall recovery, drive up housing costs, and push more Angelenos into long-term displacement. However, there is an opportunity to do things differently.

The Solution: “Like for Like on a Smaller Lot” and Market-Driven Recovery

• Los Angeles’ “Go Home” program would allow wildfire-affected homeowners to rebuild to the original square footage on a lot that would now allow up to four townhomes. This empowers families to rebuild faster, create homes that are more affordable, and stabilize their communities.
• Expanding “Go Home” to a 10-mile radius of the wildfire zone ensures that housing supply meets the growing demand, helping address an affordability crisis and reducing displacement pressure.
• By streamlining permitting, eliminating unnecessary zoning restrictions, and allowing pre-approved home designs, we can unleash a wave of private-sector-driven recovery—allowing displaced residents to “Go Home” faster, with affordability.

Why Now? The Urgency of Action

We have a narrow window to set Los Angeles on the right path. If we don’t act now:

• Bureaucracy will slow recovery, delaying rebuilding for years.
• Rebuilding costs will skyrocket, pricing out displaced families.
• Bad zoning policies will lock in exclusionary rebuilding rules, blocking housing expansion when and where it’s needed most.

By acting today, we can unlock market-driven solutions, create new housing opportunities, and rebuild Los Angeles stronger than ever.

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