A leading US real estate expert has revealed why wildfires in California have caused property prices to soar, despite the devastating impact they have had on local communities.
Alistair Brown, Chief Executive of the ABI Group, a Florida-based real estate agency specialising in Florida holiday homes, explains why natural disasters, like wildfires and hurricanes, can actually drive up property prices in certain regions.
Wildfires in California have led to widespread destruction, particularly in areas like Malibu and Pacific Palisades.
However, Brown suggests that the aftermath of these disasters often triggers a unique market response.
LUCRATIVE MARKET
He says: “Los Angeles real estate remains highly sought-after despite recent wildfires. Demand is still incredibly strong, particularly in prime locations.
“While the wildfires, rising construction costs, and regulatory hurdles have had an impact, the region continues to be one of the most lucrative markets for property investors.
“Natural disasters tend to cause inflationary pressures on the housing market, which, paradoxically, can increase house prices in affected areas. Even after these events, the demand for housing in desirable locations like Malibu, Santa Monica, and Pacific Palisades remains sky-high.”
HURRICANE IMPACT
Meanwhile, Florida, which has experienced its own challenges with frequent hurricanes, is also seeing a surge in property prices.
Brown says: “Florida has had its own set of setbacks with hurricanes hitting the state, but many inland areas in Central Florida remain relatively unaffected. These regions provide a safer investment option for property buyers who are concerned about the risks of extreme weather.”
Brown believes that the rebound following natural disasters often presents an opportune moment for investors to act.
And he adds: “The main driver of increased demand after disasters is the way state governments respond.
“They invest substantial resources into rebuilding and offer incentives for developers, making it a good time to secure prime real estate at competitive prices. This recovery phase isn’t just about restoring what was lost, but reimagining the future and creating new opportunities.”
HOUSING SUPPLY CRISIS
Brown highlights the ongoing housing supply crisis in Los Angeles, which has been worsened by the wildfires.
He says: “Los Angeles faces a severe housing shortage, with over half a million units needed by 2025. This shortage has led to overcrowding, long commutes, and a major rent burden. Many tenants now spend more than a third of their income on rent, which is unsustainable.
“Both regions continue to offer strong demand for housing and the potential for long-term capital appreciation. With government-backed rebuilding efforts and a focus on addressing the housing shortage, now is an ideal time to secure valuable properties in these resilient markets.”
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