As 2025 kicked off, nobody could predict the wildfire devastation in Los Angeles burning thousands of homes to the ground and leaving thousands more homeless.
Mortgage rates, interest rates, a new administration, and stock volatility were all on everybody’s radar. Rebuilding Los Angeles is an incredibly tragic black swan—an unexpected event that upends the economic outlook. A reconstruction effort of an epic scale is going to dominate conversations around the housing market for years to come.
More than 12,000 structures have been destroyed., and thousands more people have had their lives completely upended, with damage estimates topping $100 billion. That includes everything from mansions to the most modest of working-class homes, a mix of housing that will be near impossible to replace quickly.

The demand for housing is already skyrocketing in the city, something that will be exacerbated by the devastating fires. California’s Regional Housing Needs Assessment found the city must add 456,643 units from 2021 to 2029 to meet demand—and that was before thousands of people suddenly found themselves homeless and looking for alternative housing.
And the for-sale market won’t be a quick solution for those seeking housing either. A low number of homes have been placed on the market recently, spurred by homeowners locked into low mortgage rates and others who have held off on listing their homes because they want the overall market to improve to get top dollar.
One result? People will simply leave California. This is already happening. In U-Haul’s annual report on migration, released this year, it found the state was the No. 1 market people were leaving. Where were they going? South Carolina, Texas, and North Carolina were clear winners.
Meanwhile, insurance will be increasingly difficult to obtain for those left behind. Those that manage to find a good policy are likely to find themselves suffering from sticker shock when the bill comes in and their premiums reflect the high-risk they’re taking on by living in a disaster-prone area. Between 2020 and 2022, over 2.8 million policies were canceled, and some HOA fees have doubled or even tripled.
The new-home industry will be instrumental in rebuilding what was lost. It will need to find ways to overcome massive challenges, but already measures are being enacted that will make it easier for builders to get the job done. One such measure allows those affected to rebuild their home 20% larger, which can lead to innovative design and building opportunities.
The true test of California’s resilience lies in its response to this disaster. It’s an opportunity to create a legacy of strength, unity, and innovation. By rebuilding smarter and stronger, we can lay the foundation for sustainable, disaster-resistant communities.