Palisades Real Estate Market: How long does it take to recover?

The Palisades real estate market It will be a “standstill” for some time as the fire rages and tens of thousands of residents evacuate the area, according to an industry economist.

Deals will be delayed until the full extent of the damage is assessed, but movement in the market will resume for homes left unscathed, Redfin chief economist Daryl Fairweather told FOX Business.

“There could be some jitters for the next few weeks, maybe. But after the dust settles and the fires are out, I think the impacts will be very localized to just the homes that were damaged,” Fairweather said.

CALIFORNIA WILDFIRES: WHAT TO DO WHEN YOU EVACUATE

As of 4 p.m. ET Wednesday, at least four fires were burning in Los Angeles County. Zero percent of the fires were contained, officials told Fox News.

Additionally, more than 30,000 residents are under mandatory evacuation orders and tens of thousands have lost power. Governor Gavin Newsom declared a state of emergency, warning that the worst of the winds were expected between 10 p.m. Tuesday and 5 p.m. Wednesday.

Homes burn as powerful winds drive the Eaton Fire on January 7, 2025 in Pasadena, California. (David McNew/Getty Images/Getty Images)

Fairweather believes business will return to normal fairly quickly for homes outside the evacuation zone, even those near the damage that are still intact. She does not project that the houses will be difficult to get a buyer, since the area is so “sought after”.

In 2021, Redfin published a report that analyzed the areas directly affected by the fires, and found that there was an average increase of 595% in the number of houses built during the three years after a fire. Comparatively, there was a decrease of 6% in the areas that fall outside the perimeters of the fire.

Since the area is so valuable, I do not foresee a mass migration out of the area and I believe that the reconstruction projects will start within the year.

Plumes of smoke are seen as a brush fire burns in Pacific Palisades, California, on January 7, 2025. (DAVID SWANSON/AFP via Getty Images/Getty Images)

Christopher Anderson, a Redfin real estate agent based in Napa, Calif., previously said that after the fires, “local authorities tend to speed up permits and design reviews, and push fire-hit properties first line”. communities can rebuild.

WATCH LIVE: WILDFIRE COVERAGE ON FOX WEATHER

He added that “they build houses in four to six months after the fires, while normally it can take a year and a half for a builder to get a shovel in the ground.”

However, Fairweather said in the Redfin report that the fires themselves tend to make housing more expensive.

GET FOX BUSINESS ON THE GO BY CLICKING HERE

“After a city burns, builders come in and build new homes, which are typically more expensive. And homeowners who stay often invest in making their home more fireproof, which increases property value,” he said.

Realtor.com Chief Economist Danielle Hale also noted that house prices and rent may increase in the short term as “homes on the market dwindle as homeowners postpone sales plans to assess damage and displaced locals try to find temporary housing in the area.

But, “the longer-term outlook will be more mixed, depending on the speed of reconstruction and whether the desirability of an area outweighs concerns about a potential repeat event,” he added.

Firefighters run as a brush fire burns in Pacific Palisades, California, on January 7, 2025. (Photo by David Swanson/AFP) (Photo by DAVID SWANSON/AFP via Getty Images/Getty Images)

In fact, in a separate Redfin report, the real estate company, said that builders are confident of rebuilding in high-risk areas given that the demand is there. In fact, more people are moving in than out of areas facing a high risk of wildfires and other natural disasters related to climate change, according to an August 2021 Redfin report.

Conversely, Jake Herczeg, a licensed architect with an extensive background in property operations and director of operations at Ballast said that building in “dense urban areas like San Francisco, CA, safer long-term investments go versus suburban and rural areas that pose higher risk.”