Key Points:

• Approximately 1.1-1.6 percent of Los Angeles' housing stock may have already been demolished by the wildfires 
  
  
• The wildfires have rapidly reduced the housing supply, destroying an estimated 17,000 to 24,000 housing units 
  
  
• Rebuilding in Los Angeles will be challenging due to the city's difficult building environment and zoning regulations, so the loss of supply will likely increase housing costs across the city 

The recent Los Angeles wildfires are on pace to be the most destructive in California’s history. It’s too early to fully assess the scale of the damage, as the emergency is not yet over. But it is clear that one result is a housing “supply shock,” or a rapid reduction in housing supply. At this time, it’s difficult to quantify the extent of the supply shock. Most available reports so far only count “structures” destroyed, which doesn’t easily translate into “housing units,” the typical measure of supply in the residential market. 

In this X-Factor, we prepared an initial estimate of housing stock destroyed by the recent fires. Our analysis reveals between 1.1 and 1.6 percent of Los Angeles’ total housing stock may have been destroyed within the first week of the fires.

There will be more detailed analysis of the housing supply shock when the emergency is over, but in this preliminary accounting we estimate approximately 1.1-1.6 percent of Los Angeles’ housing stock may have already been lost to the wildfires.

Commercial and Residential Property Stock in Los Angeles

To convert “structures” to a more familiar measure of real estate inventory, like housing units, we first need an estimate of the total size of that inventory. In Los Angeles, approximately 80 percent of all properties are single family-residences (SFR). The remaining 20 percent are comprised of office, industrial, retail, hotel and multifamily properties of various sizes and classes. Multifamily properties are significantly larger and consist of multiple units. Of the 1.5 million total housing units, approximately 905,000 (58 percent) are in multifamily properties, while the remaining 660,000 (42 percent) are SFRs.

Characteristics of Multifamily Stock in Los Angeles

It’s somewhat simpler to measure the number of SFR units destroyed, since a single unit usually corresponds to one detached standalone structure. Multifamily properties, by contrast, vary meaningfully in size. Out of approximately 905,000 apartment units in Los Angeles, around 200,000 are in smaller multifamily properties with two to four units, commonly known as duplexes, triplexes, or quads. Buildings with five to nine units account for about 150,000 units. Mid-sized buildings with 25 to 49 units also account for approximately 150,000 units.

One assumption necessary to estimate the total number of housing units destroyed is an estimate of the average number of units in apartment buildings in Los Angeles. According to CoStar, that’s approximately 18 units per building. In our analysis, we decreased the average unit count by 20 percent to 14 units per building to account for the predominance of single-family homes in both the Palisades and Altadena, especially in northern Altadena along the foothills where the Eaton fire has found plentiful fuel to spread. That said, the fire has partially spread into the southern Lake Avenue and Fair Oaks Avenue corridors into locations of Altadena that contain higher density apartment units, and this should be considered in any update to the estimate of the number of units per building affected by the fires.
 

Residential Structures and Housing Units Destroyed

The central challenge with estimating housing units destroyed is the conversion from “structures” to units. According to Los Angeles County Fire Chief Anthony Marrone, a structure can refer to a building, but it also can include things like a shed, a pool house, a chicken coup, or even a vehicle. This is because the initial estimates of destroyed “structures” come from infrared aerial photographs and it’s not always easy to identify what a burned shape is in an image. However, officials do examine these photographs and attempt to exclude vehicles where possible to get a more accurate count of building structures, which suggests that the structure count should trend down towards the true building count over time.

Currently, it’s estimated that between 12,300 and 17,000 structures have been destroyed by the Palisades, Eaton, and other smaller fires throughout LA. These wildfires are likely to be the most destructive in California’s history in terms of the number of structures destroyed. 

We adjusted the estimate of structures destroyed to account for non-property structures, like vehicles, by assuming that approximately 25 percent of all identified structures are either vehicles or auxiliary buildings, like chicken coups and sheds. Second, we assumed that burned areas contain roughly the same proportion of commercial and residential buildings as in the rest of Los Angeles (as shown in chart 1), and that multifamily properties destroyed have an average of 14 units per building as described above. 

These assumptions produced an estimated loss of between 17,000 and 24,000 housing units based on reports of destroyed structures. Given a total housing stock of approximately 1.5 million housing units in Los Angeles, this implies that between 1.1 and 1.6 percent of the housing stock has already been destroyed. 

Growth in Housing Units in Los Angeles over time 

It can be difficult to grasp the scale of a supply shock using percentages, especially in a large and spread-out area like Los Angeles. A more tangible way to understand the destruction is by looking at the number of housing units built in Los Angeles over the past three years. From 2021 and 2023, between 10,000 to 15,000 new housing units were added each year for a total of roughly 32,000 units. Furthermore, the estimated number of housing units destroyed by the Los Angeles wildfires is approximately the same as the new supply delivered in 2022 and 2023 combined. Based on this analysis, Los Angeles has lost approximately two years’ worth of new housing supply. 

Rebuilding in Los Angeles will be challenging. The city is known for its difficult building environment. Although there have been some moves to relax certain regulations to ease redevelopment, it remains to be seen whether these policies will have their intended effect. Long redevelopment times and high redevelopment costs means there will be a significant period of time where all the displaced households will be seeking housing with less housing suddenly available. Additionally, approximately 72 percent of all residential land in Los Angeles is zoned exclusively for single-family development, which could make it difficult to quickly build housing stock densely enough to accommodate demand.

This will increase housing costs—both prices and rents—across the city. However, if many people who have lost their homes choose to relocate to other cities, the supply shock would be less severe, and the impact on rents and house prices would be more limited.

The Human Toll

I’m a native Angeleno who’s lived in Los Angeles most of his life. It’s been a challenging week, and I’m one of the lucky ones. We Angelenos fortunate enough to still have our homes have developed a new shared experience of checking the Watch Duty app every couple of hours during the night to make sure a new fire didn’t ignite in our neighborhood during the extreme Santa Ana winds. While putting a number to the scale of the devastation has important ramifications for how Los Angeles chooses to rebuild and recover, it’s important to bear in mind that in those numbers are tens of thousands of individual tragedies for people who woke up one morning expecting an ordinary day, then lost most of their earthly possessions in a matter of hours. 

There will be more detailed accounting of the housing supply shock when the emergency is over, but in this preliminary analysis we estimate approximately 1.1-1.6 percent of Los Angeles’ housing stock may have already been lost to the wildfires.