Assessing the housing damage in LA: Costliest fires ever?
Damage estimates are as high as $50 billion with thousands of properties destroyed, containment elusive and at least five people killed.
Key points:
- Nearly 180,000 people in Los Angeles County have been ordered to evacuate their homes.
- The wildfires have also damaged or engulfed some celebrity homes, including houses belonging to Paris Hilton, Billy Crystal and Mandy Moore.
- The devastation comes during a time of upheaval in the private insurance market and just months after State Farm dropped thousands of policies.
Devastating wildfires sweeping through thousands of acres in Los Angeles County have killed at least five people and left nearly 180,000 people under evacuation orders in communities in and around California's most populous city and the heart of the entertainment industry.
'Costliest blaze in U.S. history'?
The Los Angeles Times reports that over 2,000 homes or other buildings have been damaged or destroyed, citing the L.A. County Fire Department. The destruction is nearly equally split between the Palisades fire and the Eaton fire, the L.A. Times noted. But the true extent of the damage won't be known until the fires are contained, if not extinguished, and that could be days away.
Some experts told The Wall Street Journal the fires could become the costliest ever, with early estimates ranging from $20 billion to $50 billion.
The Hollywood perspective — and misinformation
Another fire — dubbed the Sunset fire — broke out yesterday evening in the Hollywood Hills. Celebrities and affluent homeowners in Malibu have been impacted by the spread of the wildfires and some shined a uniquely Hollywood spotlight on the heartbreaking situation.
"Most horrific fire since '93," wrote Mark Hamill, describing his last-minute escape from Malibu to more than six million followers on Instagram. According to the Associated Press, Paris Hilton, Billy Crystal, Mandy Moore and Cary Elwes have all reported either experiencing damage to or wholesale destruction of their homes.
And as the wildfires occur in the age of AI, misinformation has become an issue. Despite some instances of social media users posting altered or AI-generated images, officials noted that LA's iconic Hollywood sign did not go up in flames.
What happens with home insurance?
California homeowners — including some in the areas affected by this week's wildfires — had already faced challenges with homeowners insurance. State Farm stopped issuing new policies in California in 2023, and then last summer said it would not renew the policies of more than 72,000 properties because of rising costs and "catastrophe exposure."
A New York Times headline refers to this week's wildfires as a "pivotal moment" for the insurance industry while a Bloomberg editorial says the fires "expose a $1 trillion hole" in American home insurance. Due to the issue of private insurers pulling out of the state or canceling policies, roughly 500,000 California homeowners have instead turned to the state's own FAIR Plan insurance program — which exposes the state to potentially tens or hundreds of billions in risk.
According to Realtor.com data, the median list price for the Pacific Palisades is a whopping $4.5 million while the media sale price for homes in the area is $3.5 million.