A few weeks ago, the home of Dr. Damon Raskin in Los Angeles’ wildfire-stricken Pacific Palisades neighborhood burned to the ground. Yet even as he, his wife and two teenage children were still in shock, and even before being able to see the charred remains, the family had made a decision: “We want to rebuild our house,” Raskin said.
That one family’s juxtaposed situation — a mixture of sudden grief and steely resolve — epitomizes the plight thousands of Angelenos will be facing in the aftermath of the catastrophic firestorms that have ravaged Pacific Palisades, Altadena and neighboring communities, in addition to the latest set of fires that have broken out to the north of Los Angeles.
It also speaks to the daunting task confronting California’s homebuilding industry, as well as state and local agencies, that will be collectively involved in the massive reconstruction of more than 12,000 destroyed and damaged structures, at a cost already estimated at $40 billion.
“Rebuilding the homes themselves actually is the easy part,” said Tom Grable, division president, Orange County-Los Angeles, for Nevada-based Tri Pointe Homes. “The much harder part is what it’s going to take to bring those lots back to buildable form,” alluding to the colossal job of removing tens of thousands of decimated acres strewn with tons of hazardous debris. “And that has to be done in a comprehensive, programmatic approach,” he said.
In order to accelerate the cleanup and rebuilding processes that already involve a slew of regulatory red tape, California Gov. Gavin Newsom and Los Angeles Mayor Karen Bass have both issued executive orders. Newsom’s action suspends permitting and review requirements under the California Environmental Quality Act and the California Coastal Act. Bass’ order likewise will expedite permitting and also streamline debris removal.
Grable is on the board of the California Building Industry Association, a trade group representing homebuilders, contractors, architects, designers, engineers and materials suppliers throughout the state. The CBIA “is literally from ideation to escrow,” said the association’s president and CEO Dan Dunmoyer. In this instance, he said, “that means you take a burned-out piece of property and then go through the whole process of building that out.”
Raskin has just begun the multifaceted process involving builders, regulatory officials and insurance providers. “I’ve talked to a friend who’s a builder, and he gave me the name of an architect,” he said. “So we’re already making those initial contacts, because we know that so many people are going to engage architects and builders.”
High on Raskin’s to-do list, too, is researching fire-resistant lumber, siding, insulation, windows, roofing and other materials he’ll need to protect his new home from future blazes. That type of infrastructure wasn’t required when his now-ruined house was built in 1998. The state has since instituted wildland-urban interface codes, which mandate fire-resilient construction in high-risk fire zones.
Homebuilders’ role in housing supply
It’s often said that catastrophes present opportunities to improve systems, a reality Southern California’s homebuilding industry is encountering, albeit with sensitivity as the wildfires are still burning.
Large production companies such as Tri Pointe, KB Home, Lennar and Toll Brothers specialize in building multi-home developments and multi-family complexes, so they will not be heavily involved in constructing individual houses in LA’s blighted neighborhoods. Instead, they might entice displaced residents who opt out of the city’s high-priced, supply-constrained housing market in favor of more affordable planned communities nearby.
“It’s not like we’re trying to take advantage of those people,” Grable said, “but we have homes available for them. We’ve already had calls from brokers for our homes in Santa Clarita and Valencia, commutable distances to LA, and we have plans for more homes to come online in the future.”
KB Home, headquartered in Los Angeles, declined to comment. But on a conference call with analysts following its fourth-quarter earnings report on January 13, CEO Jeffrey Mezger was asked about how the wildfires might impact KB’s business.
Acknowledging that it’s too early to speculate, while the fires continue burning, “This will be an extremely complex situation to deal with and it’s going to take some time,” Mezger said. “So we don’t expect that six months from now there will be 8,000 housing starts in LA County as all these homes go right back up. I think it will be in a onesie, twosie kind of a cadence.”
That puts the focus on smaller local and regional homebuilders and contractors to compete during what will surely be a years-long rebuilding effort. They might be “companies specializing in higher-end custom homes” that they built decades ago in Pacific Palisades, Dunmoyer said. “They have the architectural designs and the expertise.”
While the current wildfires are forecast to be the costliest in U.S. history, the Golden State, unfortunately, is all too familiar with rebuilding communities wracked by previous wildfires, including Santa Rosa and Paradise in Northern California in 2020. That was 10 years after the state’s fire codes went into effect, so contractors are attuned to working with fire-resistant materials.
Increased demand, however, could possibly stress materials manufacturers — including CertainTeed, GAF, Owens Corning, Andersen Windows and Masonite — as well as their shippers, distributors and retailers. Specifically regarding lumber, though, increased tariffs threatened by President Donald Trump on Canada, a major source, might burden supply chains and raise prices, which will be absorbed by homeowners.
“That could have a far greater impact on the cost of rebuilding in California than any [materials] price increases or enhanced marketplace dynamics,” Dunmoyer said.
Fighting over insurance claims, and a limited pool of money
Even before work on their new houses begins, most homeowners will need to file insurance claims for destroyed houses and contents. It’s an especially arduous process in California, where a number of insurance companies, burdened by covering losses from previous wildfires, earthquakes, floods and other natural disasters, have either fled the state or stopped writing new policies.
That leaves some homeowners turning to the California FAIR Plan, created by state lawmakers in 1968 as a so-called insurer of last resort for people who can’t get coverage elsewhere. As of early January, “the FAIR Plan had just $377 million available to pay claims and has $5.75 billion in reinsurance available,” a statement from the office of Sen. Alex Padilla, Democrat of California said. Whether commercial insurers will cover the rest of the multi-billion price tag is bound to be a rancorous issue.
Raskin has a policy under the FAIR Plan, which pays claims up to $3 million for residential policyholders. “That might help cover the rebuilding,” he said, “but doesn’t cover anywhere near the contents of what was in the house.” He’s hired a public insurance adjuster to help him recoup his uncovered losses in other ways, he said, and hopefully avoid large out-of-pocket expenses.
In the meantime, Raskin and his family have rented a house in Santa Monica for who knows how long. “Our new home won’t be built in less than three years,” he said. Odds are high that the Raskins won’t be alone during LA’s long recovery.