The housing shortage could take years to recover
The wildfires raging across Los Angeles have destroyed between 12,300 and 17,000 structures, leading to an estimated loss of 1.1% to 1.6% of the city’s housing stock.
According to Xander Snyder, senior commercial real estate economist for First American Financial Corporation, this sharp reduction in housing supply is poised to have lasting economic effects on the region.
The destruction of these structures includes a mix of residential and non-residential buildings, such as sheds and vehicles. After adjusting for the different types of structures affected, it is estimated that between 17,000 and 24,000 housing units have been lost.
Los Angeles’ housing stock totals around 1.5 million units, with 58% located in multifamily properties and the remaining 42% in single-family residences.
Multifamily buildings, such as duplexes and apartment complexes, typically average 18 units per structure. However, in areas heavily impacted by the fires, such as northern Altadena, the average number of units per building is considered to be lower, around 14 units per building, reflecting the prevalence of lower-density housing.
This loss of housing stock comes at a time when Los Angeles was already struggling with housing supply. Between 2021 and 2023, the city added approximately 32,000 new housing units. The destruction caused by the wildfires has effectively erased nearly two years of housing growth, intensifying the existing shortage.
Rebuilding efforts in Los Angeles will face significant obstacles. Nearly 72% of residential land in the city is zoned exclusively for single-family homes, which will limit the potential for high-density housing developments. Additionally, the city’s redevelopment process is known for being costly and time-consuming, which could delay recovery.
The short-term impact of these losses is expected to push up housing prices and rents. However, if many displaced residents relocate to other regions, the pressure on local housing demand could ease.
How should Los Angeles address the challenges of rebuilding and ensuring the availability of housing for its residents? Share your thoughts in the comments below.
