The devastating fires in the Pacific Palisades and Alta Dena destroyed nearly 12,000 homes. Many believed it would significantly impact buyer demand within the residential resale market. The data illustrates very little change in demand below the luxury threshold of $2 million. While there may have been a 50 pending sale rise in demand for homes between $1 million and $2 million, or 5%, there was a 97 pending sale rise, or 12% year-over-year, last year for the same price range. However, there has been a noticeable impact on luxury demand. For homes priced between $2 million and $4 million, there are 73 additional pending sales year-over-year, 27% higher. For homes priced at $4 million or higher, there are 48 additional pending sales, or 66% more. The year-over-year difference last year for luxury demand was slightly negative. The data illustrates that the fires will impact the upper end for the foreseeable future but will not result in an excessively hot luxury market because the active luxury inventory is up dramatically compared to last year. A limited number of wealthy fire victims have the necessary liquid funds in bank accounts that will allow them to purchase a home immediately. It will take a very long time for most fire victims to rebuild, sell if they desire, and buy another home.
There has been a substantial impact on residential leasing. In January, leasing activity was up 53% year-over-year. It was the most residential leases in Los Angeles for any month, dating back to 2000 when tracking began. There were 3,263 leases this year compared to 2,126 last January. The numbers were up significantly in every price range. This should continue as additional fire victims move out of hotels, vacation rentals, and family and friends’ homes and seek longer-term temporary housing. This will strain the supply of residential leases, increasing pricing pressure.
