Developers Making Plays to Buy Burned Lots in L.A. Fire Zone
By Jack Rogers | GlobeST | March 18, 2025
Two months after wildfires swept through Pacific Palisades and Altadena, destroying an estimated 12,000 homes, a growing number of property owners are selling their burned lots rather than rebuilding.
As of last week, there were 60 burned lots for sale in Pacific Palisades and 32 on the market in Altadena, the Los Angeles Times reported.
The total number of destroyed lots that have hit the market in the Palisades and Eaton wildfire zones since the January disaster is more than 160, according to data from ATTOM, as reported by The Washington Post.
In the communities devastated by the wildfires, lots that once held leafy mountainside neighborhoods with sweeping vistas of Los Angeles, have been reduced to charred landscapes filled with toxic waste. Nearly 60% of the structures in Pacific Palisades were destroyed and almost half of those in Altadena are now piles of rubble.
Now, developers are swooping in to make cash purchases from a growing number of sellers who are opting out of what is expected to be a time-consuming and costly rebuilding process.
The newspapers described what the Post called a “frenetic rush to buy and sell scorched lots,” with the pace exceeding expectations. “The damage hasn’t deterred sales; it has accelerated them,” the report said.
A typical listing for a fire-scarred lot in Altadena described a 10,500-square-foot, ash-filled parcel as an “incredible canvas for a custom-built estate.” The listing didn’t specify the disaster but noted: “Opportunities like this where privacy, natural beauty, and limitless potential converge are truly rare. Property sold as-is. Cash offers only.”
According to local real estate agents, for every available lot in the fire zones, there are at least 10 interested buyers. This mostly breaks down to developers and builders offering cash deals to buy the fire-scarred lots.
Bidding wars have erupted In the Palisades, one of L.A.’s wealthiest enclaves. Nearly all of the lots sold there have exceeded their asking prices, with one parcel fetching $3M, the Post reported.
In middle-class neighborhoods that were destroyed in Altadena, residents are raising concerns about gentrification and whether property owners are getting fair prices in the sudden land rush.
Eight burned-out lots in Altadena recently were sold, with each priced in the $500,000 to $600,000 range according to Zillow. That's about two-thirds of what the land would have fetched before the fire. Altadena residents have started holding rallies with signs declaring “Altadena is not for sale,” the Los Angeles Times reported.
Recent history suggests that new development in the fire zones may result in higher home prices once the properties destroyed in the fire are replaced. A UCLA study of the rebuilding effort in Paradise after the Camp fire destroyed 80% of the homes in the area in 2018 found that home prices and median incomes in the area were significantly higher five years later.
As the number of burned-out lots on the selling block multiplies, the debate over whether to rebuild and what to build in the areas consumed by the Palisades and Eaton fires also is growing.
According to a new poll from the UC Berkeley Institute of Government Studies (Berkeley IGS), an overwhelming majority of Los Angeles County voters support strengthening building codes and imposing greater restrictions on home construction in high-risk areas.
About 80% of the respondents backed tougher codes to make homes more fire-resistant, even if doing so added to the costs. Seven out of 10 respondents wanted more regulations to curb homebuilding in wildfire-prone neighborhoods.
“This is a huge event in L.A. history,” said Mark DiCamillo, poll director at Berkeley IGS. “It’s having a major effect on what people think needs to be done in terms of making housing safer.”
The most striking example of this epiphany was found in the poll results from the communities directly impacted by the Palisades and Eaton fire zones: 65% of voters in the Palisades fire zone said they are in favor of homebuilding limits, as did 61% in the Eaton fire area.
The Berkeley IGS poll found broad backing for increased taxes to pay for fire protection and to build higher-density housing in urban areas. Nearly a quarter of the homes lost in the January fires were apartments, other multifamily housing or mobile homes.
Of those surveyed, 46% support a tax structure requiring those living in high-risk fire areas to pay more for public services including fire departments, while 43% oppose the measure.
More than half of those surveyed opposed allowing insurance companies to increase their rates if it enables them to offer fire coverage more broadly.
Los Angeles Aims to Put Housing on Vacant Lots
By Jack Rogers | March 11, 2025 | GlobeST
Los Angeles is turning to small, vacant lots in its latest effort to generate new housing.
According to UCLA's cityLAB research center, there are an estimated 24,000 empty lots, each measuring less than a quarter of an acre, in areas of L.A. currently zoned for housing.
The city, which owns about 1,000 of these spaces, is planning to sell 10 of them to developers in a pilot program that aims to demonstrate the feasibility of building smaller, lower-cost starter homes on these parcels.
L.A. is partnering with cityLAB and LA4LA, a public-private program, on an initiative called Small Lots, Big Impacts, which kicked off last week with a design competition inviting architects to craft plans for these vacant lots.
The goal of the competition is to encourage the use of innovative materials and construction methods to build fire-resistant structures while bringing down the overall construction cost of the units, the Los Angeles Times reported.
Architects are being asked for designs that envision multiple homes on one lot, but also provide prospective homeowners access to outdoors, natural light and “a comfortable relationship with neighbors.”
The winning designs eventually will serve as pre-approved city templates that developers can deploy to build housing on the vacant lots. According to the city housing department, eventual projects are likely to be between four and 20 units, with building heights ranging from one to three stories.
The city plans to use proceeds from the sale of the vacant lots to help fund down-payment assistance for home buyers who would purchase the new units built at these sites.
“Angelenos should be able to buy their first home and raise their families in our city. The launch of Small Lots, Big Impacts is a step toward that future,” Mayor Karen Bass said in a statement.
According to the state-mandated housing plan for Los Angeles, the city is required to identify sites where an additional 255,000 homes can be built.
Last month, the Los Angeles City Council unanimously gave its final approval to a rezoning plan that aims to increase housing development along commercial corridors. The plan, known as the Citywide Housing Incentive Program (CHIP), allows developers to exceed current limits on building if they include a fixed percentage of affordable units in new developments and the property is near public transit.
Almost all of the new development envisioned by the CHIP plan is targeted for existing multifamily or commercial zones in Los Angeles. Single-family zones were largely excluded from the plan, except for property owned by a public agency or a faith-based organization.
Tenant groups have expressed concerns that focusing redevelopment in areas that already are dense with multifamily housing could lead to mass displacement as developers demolish older apartment buildings to replace them with new developments.
At the same meeting, it approved the CHIP plan, the council passed tenant protection rules that give low-income residents displaced by demolition the right to move into the new development at either their prior rent or a price deemed affordable to their income, whichever is lower.
These residents would typically receive expanded relocation assistance to help them afford rent in a market-rate unit during the 42 months it takes on average to build a new apartment building, according to the city.
Multifamily Developers Show Cautious Optimism for Year Ahead
By Kelsi Maree Borland | February 25, 2025 | GlobeST
Multifamily developers have faced significant challenges in the last couple of years. The construction pipeline has shrunk in the wake of high interest rates, limited construction capital and an uncertain economic climate. The end of 2024 marked the lowest number of new construction starts in a decade.
As economic conditions improve this year and rates begin to stabilize, multifamily developers are cautiously optimistic about new activity. According to Mark Bridge, EVP and senior director at Matthews Real Estate Investment Services markets like California that are adopting pro-development legislation and providing incentives for new construction should benefit. While things are looking up, he says there are still some headwinds to new development.
Multifamily Deliveries Will Slow in 2025
In 2024, a record number of new multifamily properties were delivered to the market. The activity stemmed from the low interest rates in 2021 and 2022, which helped expand the multifamily development pipeline.
“Multifamily developers slowed down when those interest rates went up and things started to change,” says Bridge. “We’ll see the effect of that slow down this year.”
Bridge expects deliveries will decrease by 50% to 60%. While it will be a dramatic change from the delivery schedule from the last few years, it is on par with the multifamily units delivered from 2014 to 2019, according to Bridge.
While economic performance is improving, there remain some obstacles to new development this year. Bridge notes that lending rates are still very high, making it difficult to make a project pencil. In addition, tariffs could significantly increase materials costs, and some are concerned that new immigration policies could exacerbate worker shortages.
“I don't think that is as big of a hurdle as the higher interest rates,” says Bridge of the tariffs and immigration policy. “Because there has been a slowdown in new construction, there is already increased unemployment of construction workers and better materials pricing.”
California’s Pro-Development Laws Create an Opportunity
California is producing very pro-development legislation to help combat the state’s severe housing shortage. In particular, the state has lifted restrictions on ADU development to help increase the housing stock. Bridge has seen several multifamily properties use the laws to increase density, noting one 40-unit apartment building in Anaheim that converted parking garages into eight new units.
“Normally when you wanted to add an ADU or build new units, they wanted two parking spots per unit,” says Bridge. “Now the parking is really getting eaten up and people are creating units out of the garages.”
The state’s pro-development legislation is also creating an opportunity for developers to redevelop old industrial, office and shopping center sites into new multifamily. “In infill Orange County, we're seeing smaller industrial and office properties getting torn down to build large apartment buildings in certain areas,” says Bridge.
The legislation isn’t only lifting restrictions, it is also providing financial incentives for certain types of development, like affordable and transit-oriented. These policies are helping developers round out the capital stack and make otherwise impossible projects pencil.
Bridge says that these incentives are becoming a standard part of a developer’s financing package on new construction starts.
