The fast-moving Palisades fire in January caused at least $50 billion in damage to homes, and the economic impact could last for generations, according to two recent reports.
About 11,000 homes in Pacific Palisades were destroyed or suffered significant damage, with the average house valued at $3.7 million, according to Redfin. About 100 of those homes were valued at $20 million or more in December 2024, a month before the devastating fires raced through the community.
Many of the homeowners who had property damaged or destroyed by the fire are considering their next move – do they sell or rebuild and stay?
Home sales in Pacific Palisades have plummeted 84% for the first six months of the year, compared to the first half of 2024, according to the California Association of Realtors.
11,000
Homes destroyed or had significant damaged by the fire
$3.7 million
Avg. value of a Pacific Palisades home before the fire
24%
Price drop for the first six months of the year vs. a year ago
But lot sales – many where homes once stood before the fires – have soared. Almost 100 lots have sold during the first half of the year, compared to only one in the first six months of 2024. And 312 properties are currently on the market in Pacific Palisades.
PRICES FALL 24%
Of course, home prices have also tumbled. The median-home price in Pacific Palisades has declined 24% to $2.53 million, compared to $3.31 million a year ago. Of course, the cost for homeowners’ insurance has greatly increased, another obstacle for current and future owners in Pacific Palisades.
California has established the CalAssist Mortgage Fund to help homeowners with up to three months of mortgage payments as they weigh their options.
Homeowners who earn less than $140,700 are eligible for up to $20,000 in mortgage assistance through the program, paid directly to their mortgage servicer.
The average house in Pacific Palisades was valued at $3.7 million before the wildfires in January. ADOBE STOCK
CalAssist covers almost two-dozen natural disasters between January 2023 and January 2025, from the Eaton Fire to the San Diego floods. You can learn more on the CalAssist website.
A cooling economy has tossed cold water on the American dream for some would-be buyers.e leaving the profession.
More deals are falling through as buyers worry about the economy
Getting cold feet is common before life-changing events – choosing a college, the days leading up to your wedding or purchasing a home.
Just ask the one of every six would-be buyers who bailed before completing a deal in June in California, according to Redfin. The figure is believed to be the highest-ever percentage of deals falling through for the first month of summer.
Nationwide, about one of every seven (14.9%) potential buyers walked away from the American dream, more worried about a real-life nightmare amid the economic uncertainty. Last year, about 13.9% of buyers walked away.
SOCAL SLOWDOWN
The Inland Empire – Riverside and San Bernardino counties – had the highest percentage of deals falling through at 18.5% in California, compared to 18.2% in June 2024. The Inland Empire market is among the most affordable in Southern California, with a good percentage of first-time buyers who often have smaller down payments and increased risk.
In nearby Los Angeles, about 17% of buyers walked away before completing escrow, the second-largest percentage in the state. Sacramento and San Diego followed at 16% (see table, below).
Redfin did not have enough data to determine the percentage of pending deals falling through in the Bay Area. However, San Francisco and San Jose are largely equity-driven markets, where more buyers are affluent and have a significant down payment, easing worries about a recession or stock market slide (see next post on equity-rich homeowners).
| City | Pending sales canceled June ’25 | Pending sales canceled June ’24 |
|---|---|---|
| Anaheim | 15.2% | 12.6% |
| Los Angeles | 17.1% | 14.7% |
| Riverside | 18.5% | 18.2% |
| Sacramento | 16.1% | 15.2% |
| San Diego | 15.8% | 15.1% |
| U.S. | 14.9% | 13.9% |
Source: Redfin
A majority of California homeowners are considered “equity rich.”
Good odds that you’re an equity-rich homeowner
Almost three of every five homeowners with a mortgage in California are considered “equity rich,” with more equity than debt.
The 57% equity rich rate statewide was one of the best in the nation during the second quarter, but down from 59% for the same three-month period a year ago, according to ATTOM Data.
California has the top three cities for equity-rich homeowners – San Jose at 68.4%, followed by Los Angeles and San Francisco at 63% (see table, below).
But even in the Central Valley – Bakersfield to Sacramento – where home prices and price gains are often smaller, more than two of every five homeowners were considered equity rich.
THE NEW ENGLAND (EQUITY) RICH
Nationwide, about 47% of homeowners are in positive mortgage territory, down from a record 49% a year ago, according to ATTOM Data.
“With home prices at record highs you’d expect to see owners enjoying more equity in their homes, so it’s good to see equity-rich rates rebound after a few slower quarters,” said Rob Barber, CEO of ATTOM.“Unfortunately, the increase in equity-rich rates we saw in the second quarter hasn’t been spread evenly throughout the country. In some states, particularly Louisiana, too many homeowners are still struggling with loan balances that are more than their homes are worth.”
Vermont has the highest percentage of equity-rich homeowners at 85%, followed by New Hampshire and Rhode Island at 60%. Hawaii and Montana finished in third place at 59%.
Louisiana has the lowest percentage of equity-rich homeowners at 18%, with North Dakota at 30% and the District of Columbia and Iowa at 33%.
Equity-rich homeowners often have fewer financial hardships, and many can tap into their equity to help pay off credit-card debt, pay outstanding bills or even help fund college.
| City | % of equity-rich owners Q2 ’25 |
|---|---|
| California | 56% |
| Bakersfield | 43.4% |
| Fresno | 48.5% |
| Los Angeles | 63.4% |
| Riverside | 50.4% |
| Sacramento | 46.8% |
| San Diego | 62.5% |
| San Francisco | 58.8% |
| San Jose | 68.4% |
| U.S. | 47.4% |
Source: ATTOM Data
Menlo Park is one of the hottest rental markets, according to a new report. SHUTTERSTOCK
Bay Area and Fresno rent increases are among the highest in the U.S.
Three of the 10 cities in the nation with the largest annual apartments rent increases are in California, but rents in several other communities dropped from a year ago, according to the latest Apartment List report.
San Francisco and Fresno topped the rent increase list at 4.6%, as both cities enjoyed a boost in residents but found a shortage of units (see table, below).
San Jose had the seventh-largest rent increase at 2.4%, with average rent of $3,077, easily the largest in the state and about $400 more than San Francisco.
Half of the 12 markets listed in California had rent increases – with rents slipping in six others from a year ago.
Despite the largest rent increase in the nation, Fresno-area apartments are the most affordable at $1,382 per month in the state.
The average apartment rents for $2,187 in California.
| City | Rent vs. a year ago | Avg. rent |
|---|---|---|
| Fresno | +4.6% | $1,382 |
| Los Angeles | +0.27% | $2,215 |
| Napa | -1.7% | $2,329 |
| Riverside | -0.33% | $1,861 |
| Sacramento | -0.93% | $1,770 |
| San Diego | -0.45% | $2,286 |
| San Francisco | +4.6% | $2,670 |
| San Jose | +2.4% | $3,077 |
| Santa Barbara | -3.1% | $1,983 |
| Santa Cruz | -4.6% | $2,504 |
| Stockton | +1.4% | $1,658 |
| Ventura County | +1.4% | $2,506 |
Source: Apartment List
