Real estate investors are acquiring approximately 40% of the land for sale in areas affected by the January 2025 California wildfires, according to a new report from Redfin, the real estate brokerage powered by Rocket. This trend is particularly evident in zip codes like Pacific Palisades, Altadena, and Malibu, where investor purchases of vacant lots have significantly increased compared to the previous year.
In the 90272 zip code (Pacific Palisades), investors purchased 48 of 119 lots (40.3%) sold in the third quarter, a stark increase from zero lot purchases a year earlier. Similarly, in the 91001 zip code (Altadena), investors acquired 27 of 61 lots (44.3%), also up from zero. In the 90265 zip code (Malibu), investor purchases represented 19 of 43 lots sold (44.2%), more than doubling the 21.4% share from a year prior.
Sylva Khayalian, a Redfin Premier real estate agent, noted a community push in Altadena to resist selling, though some residents, particularly the elderly or underinsured, find selling to be the only viable financial option. Many homes destroyed in Altadena were built in the 1940s or 1950s. Khayalian reported that investors are frequently making lowball offers for these lots with intentions to rebuild and flip, while some owners are accepting out of desperation, despite permit delays and painstaking rebuilding processes. Many displaced homeowners are residing in rentals or have relocated.
In Pacific Palisades, an affluent neighborhood, some homeowners whose properties burned have purchased new residences while deciding on rebuilding. Justin Vold, another Redfin Premier real estate agent, highlighted a client who bought a $3.75 million home near Santa Monica and plans to work with a renowned architect to rebuild in Pacific Palisades. Another client, whose Malibu home was destroyed, recently acquired a $4.68 million Pacific Palisades house, which was unaffected by the fires but faces landslide risk. Vold anticipates more buyers entering the market as insurance coverage for temporary rentals expires and residents abandon rebuilding plans, potentially increasing the inventory of vacant lots.
Despite investor activity, a significant amount of land remains unsold in fire-impacted areas. Redfin’s analysis of the three zip codes reveals a substantial increase in lot listings compared to sales. Pacific Palisades saw 309 lot listings in the three months ending November 30, up from seven a year earlier. Altadena’s lot listings jumped to 225 from two, and Malibu’s rose to 214 from 125 over the same period.
Khayalian indicated that sellers are beginning to reduce prices to attract offers due to the high volume of unsold lots. In Altadena, lots selling for $500,000 to $600,000 might have fetched $1 million or more if homes were still present. The typical lot sold for $510,000 in Altadena, $1.6 million in Pacific Palisades, and $1.3 million in Malibu during the three months ending November 30. Carlos Castillo, a Redfin Premier agent, noted that property valuations have been challenging in these areas due to limited turnover and damaged infrastructure.
Sales of single-family homes have increased in Pacific Palisades and Altadena from post-fire lows but remain below pre-fire levels. Pacific Palisades recorded 31 single-family home sales in the three months ending November 30, up from six immediately after the fires, but down from 45 a year prior. Altadena saw 58 sales, up from 26 post-fire, but down from 67 year-over-year. Vacant lot sales, however, have surged, with 107 in Pacific Palisades and 80 in Altadena, both up from zero a year earlier. Malibu’s lot sales increased to 37 from 12.
For homes that did not burn, Khayalian emphasized that they attract offers only if priced reasonably and if ash and smoke damage have been remediated. A critical factor for prospective buyers in these areas is the affordability of fire insurance, which mortgage lenders in California require. Premiums have risen by 35% to 50% since the fires. Khayalian shared a personal experience where cleanup costs for ash and smoke damage were nearly $70,000, covered by insurance, but lead exposure cleanup, costing $160,000, is still being disputed with her insurer. Repairing a burned wall cost $20,000, and landscaping due to heavy post-fire rains amounted to nearly $30,000. She noted the exorbitant cleanup costs lead some homeowners to morbidly joke about wishing their houses had fully burned down.
