Fourteen months after California’s Palisades wildfires destroyed nearly 5,900 homes, the first fully rebuilt residence has come to market, offering the clearest pricing test yet for post-fire demand.
The newly built contemporary home — listed at just under $7.5 million — comes after the original was just one month from completion when it was destroyed.
The listing arrives as rebuilding activity gains traction, with roughly 650 permit approvals to date and nearly 475 burned lots having traded.
Anthony Marguleas of Amalfi Estates, who co-listed the property with Dan Urbach of Compass, told HousingWire that permitting timelines have proved faster than many anticipated — averaging approximately three and a half months.
The real obstacle isn’t permits
Marguleas said the real obstacle for homeowners has been misunderstood.
“There’s a misconception,” he said. “People have been reading news and [thinking the problem] is about obtaining insurance. I tell them, ‘No, it’s not obtaining insurance, it’s insurance payouts.”
His own experience illustrates the bind facing many property owners. Marguleas lost his home in the fires and is now rebuilding.
“I had to start construction. Most people have to start construction because they’re going to run out of loss of use funds,” he said. “It’s a chicken and the egg. You don’t want to start your rebuilding because you don’t know how much money you’re going to get, if you have enough money to rebuild.”
He noted that many homeowners lacked adequate insurance coverage.
“We had to start our rebuild without knowing we’re going to get the rest of our funds because we’re between a rock and a hard place,” Marguleas said. “We know we’re going to run out of our loss of use funds in about 12 months, and we may not know from our insurance company for another six months.
Insurance covers remains attainable
Despite widespread concern about the availability of new policies, data presented by Marguleas suggests coverage remains attainable.
Premiums have increased — with several major carriers requesting rate hikes of 17% to 34% — but those increases reflect broader market adjustments rather than a lack of availability, he said.
“Getting insurance coverage is not an issue in any way,” he said. “There have been 1,200 properties that have sold since the fires in the high-fire areas — Brentwood Hills, Santa Monica, Palisades — 1,200. None of them had any problem getting insurance.”
There has also been encouraging regulatory movement.
The California Department of Insurance recently approved forward-looking wildfire catastrophe models, allowing insurers to price wildfire risk more accurately.
Carriers using these models must expand coverage in wildfire-prone areas, which should help bring more insurers back into the market, Marguleas added.
A new analysis from the California Department of Insurance and National Association of Insurance Commissioners found that rebuilding to the Insurance Institute for Business & Home Safety Wildfire Prepared Home standard could reduce projected wildfire losses by one-third on average.
Land inventory, developer shift
Of the roughly 5,900 homes lost, Marguleas estimates that about 25% of the lots — roughly 1,475 — will eventually come to market, a figure based on patterns from previous major fires in California and Hawaii.
“There was a lot of misinformation earlier on that people were saying, ‘Oh, 60% or 70% of Palisades [homeowners] are going to be selling and moving out of the area,’” he said. “The reality is, based on how it’s been for going on 15 months, we think it’s going to be closer to the 25% target.”
As of two weeks ago, 483 lots had sold, 27 were in escrow and 173 were active, bringing the total available or sold to 683 — nearly half of the projected total.
But Marguleas detailed how the buyer profile has shifted noticeably in recent months.
An analysis of public records at the end of December showed just over half of buyers were owner-users. Updated research now suggests a different picture.
“It’s getting to 60% to 70% now are developers,” Marguleas said.
He added that many owner-users who purchased elsewhere — in Brentwood, Santa Monica, Newport Beach and Orange County — have opted to hire contractors and develop their original lots for sale rather than forfeit land equity.
“We believe instead of 750 there’s going to be 1,000 or even 1,200 new constructions that will be coming on over the next four years,” he said. “The question is, can the Palisades absorb it — and are there enough buyers out there that can afford to purchase $5 million to $10 million homes? I don’t think there will be. I think it’s going to be an interesting dilemma.”
Pricing the first rebuild
With only a handful of rebuilds expected to deliver in the near term, Marguleas said the first new construction to market typically commands a premium .
Early land sales following the fires saw similar dynamics.
“When the first land came on the market in February, March and April of last year, they got premiums because there was not a lot of land on the market,” he said. “The same will be happening with new construction. The first few new constructions that come on will get premiums because there’s not a lot of them.”
For landowners deciding whether to sell now or rebuild, he noted that land values remain down roughly 30% from pre-fire levels.
A 6,500-square-foot lot in the Palisades’ Alphabet Streets that sold for about $3 million before the fires now trades around $2.1 million.
“The seller is making a decision now — do I take a million dollar hit on equity selling my land today, or do I take that money and invest it?” Marguleas said. “We believe in the next three to five years the land values and property values will go back up to what they were before the fires and eventually surpass it.”
A local market returning
Despite the scale of destruction, Marguleas said the buyer pool for the Palisades remains overwhelmingly local.
“Ninety to 95% of the people that are looking to purchase in the Palisades now — for freestanding homes or for leases or for new construction — are people that lived in the Palisades before and want to get back,” he said. “They’re not outside the area.”
He pointed to signs of the town’s gradual revival such as the reopening of schools and businesses and solid timelines resuming for local projects.
“They see the town getting rebuilt. Every week a new business opens up,” Marguleas said. “It’s the locals coming back. That’s really what we’re seeing, more life coming back into the town.
“It’s the locals coming back and the local saying, ‘Yeah, I’m comfortable here.’”