Surviving the Flames: Insider Tips for Real Estate & Insurance in Crisis Zones!
Published Date: 01/31/2025
When disaster strikes, Californians know all too well that the aftermath lingers long after the last ember is extinguished. In the wake of devastating wildfires across Los Angeles and Ventura Counties, thousands of families are facing hard questions: Can I rebuild? Will my insurance cover me? What happens to my property value?
On a recent episode of Insurance Hour, host Karl Susman sat down with veteran realtor Debbie Bremner—a 48-year expert in Southern California’s housing market—to unpack how these disasters ripple through both real estate and insurance sectors. Together, they explored market trends, consumer protections, appraisal challenges, and the long-term socio-economic impacts of wildfires on California communities.
1. A Tight Housing Market Under Fire
Even before the wildfires, California’s housing market was notoriously strained—characterized by low inventory, high interest rates, and sky-high prices. The destruction of thousands of homes only worsened the imbalance. Bremner noted that many clients were left “paying more to rent than they did to own,” as displaced homeowners flood the rental market with limited options.
“Construction takes time. Rehab takes time,” she explained. “We’re looking at a tight market for a long time to come.”
Short-term, prices for remaining homes may tick upward due to reduced inventory. But the long-term trajectory remains uncertain. Some families plan to rebuild; others, weary of climate risks and regulatory obstacles, are choosing to relocate out of state. The combined effect could reshape entire neighborhoods—creating patches of rebuilt homes surrounded by vacant lots and overgrown foundations.
2. The Hidden Crisis: Price Gouging and Rental Exploitation
Another urgent issue emerging from wildfire zones is rental price gouging. In moments of desperation, displaced residents are being asked to “name their best offer” just to secure a roof over their heads. Bremner warns that this practice isn’t just unethical—it’s illegal.
Under California’s anti-price-gouging law, landlords may not raise rents by more than 10% following a declared emergency. Violators face up to $10,000 in fines and even jail time. “They are enforcing it,” Bremner emphasized. “And not only that—they’re enforcing it against the realtors who facilitate it.”
Her advice? Before signing any lease or purchase agreement, consult your attorney or realtor to confirm market rates. Consumers should report violations to local authorities or the California Department of Justice.
3. From Million-Dollar Homes to Bare Dirt: Understanding Post-Fire Appraisals
For homeowners whose properties were destroyed, the financial reality is grim. How do you value a home that no longer exists?
Bremner explains that appraisals after a fire are highly subjective. Appraisers assess the “dirt value” (land value) plus the replacement cost of the structure that was lost. However, they must also consider the loss of infrastructure—schools, roads, gas stations, and grocery stores—that affects neighborhood desirability.
“The availability of services for you is just as important as that two-bedroom, one-bath house,” she said. “If there’s no infrastructure left, even surviving homes lose value.”
The cost to rebuild today—under stricter codes and with higher material costs—can far exceed the insurance payout for older homes. That gap leaves many owners underinsured and unable to rebuild without taking on significant debt.
4. Rebuild, Relocate, or Walk Away? The Hard Choices Facing Homeowners
For many, the question isn’t just “Can I rebuild?” but “Should I?”
Homeowners must weigh emotional, financial, and practical factors—ranging from school stability for their children to long-term affordability. Bremner notes that some clients simply “don’t want to do this again,” opting instead to sell their lots or move out of California altogether.
Insurance coverage also plays a major role. Those who are underinsured may lack the funds to rebuild at all, while others may be unable to carry the property long enough to complete construction. Even with proper coverage, the process can take years—not months.
5. The Socioeconomic Ripple Effect
Beyond the housing market, wildfires devastate the service economy—the backbone of Los Angeles and surrounding areas. “Seventy percent of Angelenos were living paycheck to paycheck before the fires,” Bremner shared. “This is a fragile economy.”
When entire neighborhoods vanish, so do the jobs that sustained them: landscapers, housekeepers, small business owners, and local service workers. Without swift recovery efforts, California faces not only a housing crisis but also a financial infrastructure collapse.
“Businesses fail, individuals fail, and the state loses income,” she warned. “We cannot rebuild without financial support for these communities.”
6. Mortgage Moratoriums and Lending Chaos
Once wildfire zones are declared disaster areas, federal and state moratoriums halt all property transactions—no funding, no closings, no escrow completions—within a roughly 10-mile radius.
This freeze affects not only disaster victims but also nearby buyers and sellers. Those with mortgage rate locks risk losing their favorable terms, as each lender sets its own policies.
Bremner urged homeowners to “ask—don’t assume”:
“Every lender is handling this differently. Call your mortgage broker or bank directly to confirm your options.”
Even those granted a payment moratorium should remember: this is not debt forgiveness. Deferred payments will extend the length of the loan, not erase what’s owed.
7. The Coming Foreclosure Wave
If homeowners walk away from their properties, lenders could face a flood of nonperforming loans—mortgages tied to land that no longer holds structures. “This is a tremendous hardship for the lenders,” said Bremner. “They’re left with dirt value, but the loan was written for both the land and the structure.”
This could invite private lenders and investors to step in, purchasing distressed lots at a discount and flipping them once rebuilt. But widespread defaults could also strain banks, reduce lending capacity, and tighten mortgage standards for everyone else.
8. Protecting Against Scams and False Promises
Scammers are already preying on vulnerable fire victims. Fake contractors and “government representatives” are going door to door, offering to “rebuild your home” in exchange for signing over property deeds.
Susman reminded listeners that FEMA and the SBA will never reach out via text or unsolicited calls. Victims should visit official websites directly and avoid anyone requesting upfront cash or deed transfers.
“If someone comes to you offering a deal that sounds too good to be true,” Bremner warned, “it is.”
9. New Disclosure Rules and Wildfire Risk Reports
Future homebuyers will face tougher disclosure requirements. California already mandates sellers to reveal if a property lies in a high wildfire zone, but Bremner expects even stricter standards soon.
She recommends that homeowners obtain a Fortress Wildfire Disclosure Report, which maps vegetation, proximity to fire hazards, and mitigation recommendations. Such reports may soon become required for insurance underwriting, not just real estate transactions.
10. Looking Ahead: Rebuilding Smarter, Not Faster
The path forward, Bremner says, must balance regulatory oversight with rebuilding speed. Streamlined permits can’t come at the expense of safety or sustainability.
“We need smart legislation,” she said. “It’s not just about replacing homes—it’s about rethinking how we build so that we don’t lose entire neighborhoods again.”
Despite the devastation, both Bremner and Susman remain optimistic. Real estate, they believe, will continue to be a strong long-term asset for Californians who choose to stay and rebuild—if the state can adapt to the new climate realities.
“Fires will increasingly be part of the equation,” she reflected. “But this is still a great place to live. We just need to live smarter.”
Key Takeaways for Homeowners
- Know your rights: California bans rent gouging above 10% during emergencies.
- Stay insured: Review coverage regularly and ensure adequate replacement value.
- Verify before you trust: Only engage licensed contractors and contact FEMA/SBA directly.
- Ask your lender questions: Don’t assume moratoriums or rate locks apply automatically.
- Consider long-term resilience: Rebuilding isn’t just financial—it’s community rebuilding.
California’s wildfires are rewriting the rules of both insurance and real estate. Whether you’re rebuilding, relocating, or simply trying to understand your options, one thing is clear: knowledge is your most powerful defense.
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