by Mark McDermott
The term “housing crisis,” so often used to describe California’s housing shortage, just took on new meaning for the thousands of families who lost homes in the Los Angeles County wildfires in the last week. Many of the 5,000 left without homes in Pacific Palisades are looking for temporary and permanent new homes in the South Bay generally, and very specifically in Manhattan Beach.
Local Realtors have been involved in the mad scramble to help find these families homes. Before the fire, Pacific Palisades and Manhattan Beach were very similar communities — affluent beach towns with great schools, nicely situated close to LA, but not too close. Now one of the communities has essentially ceased to exist, and its residents are looking south towards Manhattan Beach, both for leases and for purchase.
“I spent a chunk of yesterday trying to place a family of five,” said Dave Fratello, a broker who runs the Edge Real Estate Agency, specializing in Manhattan Beach. “They needed four bedrooms or more, preferably furnished, but you know — can’t be too picky. Every single property that could possibly have suited them in Manhattan Beach was taken, with more than a dozen applications.”
The initial wave has been people from Palisades looking for long or short-term rentals, although one real estate agent who declined to be named said that the “big whale” clients — those with a lot of financial resources — jumped aggressively into both the purchase and lease market the day after the fire swept through Palisades on January 7.
“Wednesday morning, I was hearing from the whales,” the Realtor said. “Thursday and Friday, I started hearing from the people who were slower. In other words, people of great means saw the situation and were jumping on it right away.”
Richard Haynes, a broker and owner of Haynes Real Estate, said he is getting calls looking for leases, but expects as the dust settles the purchase market will become a focal point. Families at this point are searching in outright desperation. Haynes was able to help place one family who’d already lost out on other attempts in the Beach Cities, and when he told the buyer’s agent that the application was successful, the moment was filled with emotion.
“The wife cried,” he said. “I would cry too. She’s got a baby due in two months. There is so much emotion there. There’s a lot of stress. It’s just something we haven’t seen in…I think, ever. And this, as in regards to the rental market, who knows how it matriculates and affects the actual sales market in the next few months.”
Fratello likewise reported he and many of the other real estate professionals he has been talking with are encountering an unprecedented circumstance in their work with clients from Palisades.
“Usually, we’re working with clients who are moving by choice,” he said. “Still, I think those of us who really care about the business and care about our clients, achieving that mission of getting people the right home and seeing the family move in and be in the right place is one of the big rewards of this job. But it’s very rare that it’s an emergency. Now a lot of our clients are going to be people who have nothing, and have no base here and are just starting over from scratch. Honestly, the families I’ve been talking to so far have been mostly shell shocked. I haven’t had people crying. I haven’t had people complaining about what cards have been dealt to them. It’s been all business. But it’s right there, in the background: ‘Yeah. We just have to go.’”
Jerry Carew, broker and owner of Three Leaf Reality in Manhattan Beach, said the conversations are quietly heartbreaking.
“I spoke to someone just yesterday, just a regular guy, wife, two kids and a job, but you can hear the desperation in his voice,” he said. “It’s a sad scenario, just severe desperation. He needed a lease for he didn’t know how long, but he was willing to do whatever to get one.”
One property that became available on Longfellow the day after the fire had 30 applicants the moment it became available. But in this case, all the applicants were local. And that is the immediate impact on the local real estate market — the frenzy is not among only fire-affected families, but anybody locally who was looking to lease, or buy.
“I mean, that’s the problem, or part of the consequences,” Carew said. “If you were just a regular buyer, or just a regular person looking for a lease locally, the whole market has changed for you overnight.”
Part of the effort underway throughout the local real estate industry is to quickly activate lease properties that were not yet on the market. Fratello had been working for the last year with two different owners who were trying to get properties ready for lease, but weren’t there yet.
“I had to call them both and say you don’t need to do any of this,” Fratello said. “People will take it in whatever condition it’s in. One [of the homes], we were thinking we’re going to have to have an estate sale to move the furniture, and I just was very frank with the client and said, ‘You can leave everything. You can leave all the furniture. You can leave the bedding. You can leave the plates and glasses and silverware, because that’s what everybody needs.’ All of us in the business who are getting these calls. We’re trying to make matches for people who need a home, and we’re trying to bring more inventory online.”
Realtor Robb Stroyke, co-founder of Stroyke Properties Group and Bayside Real Estate Brokers, said he and his team have been working full days not only trying to find homes for fire-affected families but also basic supplies. He said brokers are reaching out through their databases to find people who own second or third homes locally who might be willing to lease their home to fire victims. When they find a match, Stroyke said, it is as satisfying as a real estate transaction can be.
“We are working tirelessly, 14-plus hours a day, for the last eight days, to help these people. We all have so many friends who were affected by the fire, and so many friends of friends who are affected by the fires,” he said. “And helping them is so rewarding because the gratitude and appreciation and the relief that they feel just getting one part of their life stabilized is just glorious to behold and experience.”
But Stroyke acknowledged that it is an uphill battle.
“The challenge before us is there just aren’t enough homes, apartments, condos and townhomes available to lease to these families, who are spread out across the southland and the west side in hotels, staying with friends and family, trying to get their lives stabilized,” Stroyke said.
Haynes said in addition to clients, he has a network of old friends from his college days who lived in Palisades who are focused on the Beach Cities.
“Those from Palisades, the first four days, they were just working the network of Manhattan Beach,” Haynes said. “The fire-affected families that had owned multi-million dollar homes, were hustling the most to Hermosa and Manhattan Beach.”
Fratello said a lot of connections already exist between Manhattan Beach and Pacific Palisades because kids from both communities attend Loyola High School, a private Catholic school known for its academic and sports programs.
“A great commonality between our community and the Palisades particularly is that a lot of families have kids at Loyola,” Fratello said. “Loyola seems to be a linchpin for a lot of the connections that already existed, between families and between kids. So now, if you can’t go back home to the Palisades, you want to go where you know your friends are, and that’s here. It’s not just the basic demographics and the need for good schools and a safe community. Those things are all kind of automatic, but there’s literally deep ties among families that pivot around Loyola.”
Fratello just recently published his annual year-in-review analysis of the Manhattan Beach real estate market in which he noted a slight uptick in sales — 304 sales, compared to 253 the previous year, an improvement but still a far cry from the boom years of the last decade that peaked with 514 homes sold in 2021. Median prices also rose, from $2.8 million in 2023 to $3.025 million in 2024. Fratello viewed the last year as a recovery year for the market and expected 2025 to continue that trend, if not drastically so. But with a likely flood of buyers from the fires, sales could go further up — all depending on the same thing that has dogged the market in recent years, a lack of inventory. In the midst of an unfolding tragedy, everything remains up in the air, but it’s clear that Manhattan Beach’s real estate market will be greatly impacted by the Palisades fire.
“It’s not indelicate to say we’ve had almost three years of a depressed market, a very stubborn, low inventory market, and I’ve certainly seen the signs that we were poised for a breakout this year, without the impact of hundreds of new buyers needing a home immediately,” he said. “We still have an inventory problem. So I am not that smart, but it is sort of basic economics — if we have too many buyers chasing too few properties, there’s going to be price impacts all across the market, right? I don’t know if we’ll have the inventory, but we are going to try.”
Any prospective sellers who were on the fence about selling may be encouraged to enter a market in which sales are likely to move quickly. Haynes said he has a client who’d been considering selling who was nudged by the events of the last week to pull the trigger sooner.
“I had a conversation with a Manhattan Beach seller of mine, we were planning to list in the spring, in March or April, and we’re going to list early February now,” he said. “Because we feel like the demand could be there. And even if it takes a couple months for people to sort out the emotions and their plans, we can probably list and wait for the right person, because there’s going to be more families wanting to come this way. I think sellers may come and meet the moment, because I am seeing more listings come to market this week where I’m like, it’s a little odd to list the first or the second week of January. Normally, it’s a slower time until the official kickoff of the spring selling season. I think people are going, ‘Let’s just put it on the market now and see if it can help families. And maybe we sell faster than than we would have, right?’”
One thing is fairly certain. Prices will go up.
“It’s going to be a lot tighter,” Carew said. “There’ll be way higher demand. And unfortunately, when you have higher demand, the price goes up on everything.”
This will include not only leases and purchases but also construction. The rebuilding of Pacific Palisades and all the other areas impacted by the LA County wildfires will be a massive undertaking. Most observers think just the initial stages will take three to five years before any semblance of a town exists again, in the most optimistic projections. That rebuilding will impact construction labor costs throughout LA County, and most certainly locally.
“It’s not going to come easy,” Haynes said. “Because if you see 5,000 homes being rebuilt in LA County — I’ve already talked to my contractors. They say in one to three years, the labor strain to rebuild these homes, all [labor] will go up there. Good luck building at a reasonable price. We already have had crazy inflation to construction prices from the pandemic. Now we are going to have a labor shortage in greater LA … I mean, the butterfly effects, so to speak, from all of this are going to be felt for many, many years, in many, many ways.”
And of course, 5,000 homes are simply the residential component of Pacific Palisades. An estimated 12,000 homes, businesses, schools, and other structures have been destroyed thus far countywide. The economic impacts are unfathomable, and not just for the areas directly impacted.
Governor Gavin Newsom has declared a State of Emergency, meaning price gouging laws are in effect. Price gouging during a declared emergency is a serious offense, prohibited under California Price Gouging Law (Penal Code 396). The law forbids businesses from raising prices on essential goods and services, including hotel rooms, rental housing, and emergency supplies, by more than 10 percent during an emergency. Newsom extended the order through January 7, 2026.
This does not impact home sales or properties for lease that are just being put on the market. Locally, many in the real estate industry have reduced or waived their own commissions in trying to place fire victims in homes. And even with leased properties being made newly available on the market, prices are consistent with what pre-fire demand would have dictated. But the avidness of post-fire demand still is going to drive prices up.
“I heard of one that came on just the other day, and it was a mad house, a feeding frenzy,” Carew said. “They put it out at what [price] you would have expected them to put it out at, but it went way over. Someone paid two years up front, cash, for lease. And what’s the seller to do? Because it doesn’t feel good. But if you put it out at the right number, at what the market was, but someone offers you nearly double and to pay it up front, what does the owner do?”
“I have a lease I am putting on today,” Carew said. “It’s in the Manhattan Sand Section, a townhome on Second Place. The value is, give or take, around $10,000 per month. So we are going to put it on at $10,500, right in the wheelhouse of where it should be. But I am expecting a firestorm.”
Haynes said a buyer’s agent he works with just posted a listing online of a five bedroom house in El Segundo for lease that didn’t even include photos of the interior, due to the rush just to get it on the market for fire victims. People flooded the agent with applications, essentially sight unseen.
“They immediately had 20 applications and people saying they’ll offer more,” he said. “It’s heartbreaking to hear all the stories….They want a place, whether it’s three months, six months, or a year. They just want to get some certainty.”
On his MB Confidential blog this week, Fratello identified a 5 bedroom home on N. Poinsettia in Manhattan Beach that was listed for sale or rent from August to November last year. The lease price was $14,000 per month, but found no takers, before disappearing briefly from the market. It reappeared last Friday at $16,000 per month.
“There was instant interest,” Fratello wrote. “It’s no longer available.”
The initial feeding frenzy is centered on the Manhattan Beach and Hermosa Beach leasing market, but is expanding south.
“I think the reasonable assumption is that it will start heading into Redondo and Palos Verdes and beyond,” Haynes said. “We’re not there yet, because the initial huge surge is Manhattan and Hermosa Beach. But ultimately, I think when the demand overwhelms the supply, people will head to South Redondo and Palos Verdes as well. The rental market, for sure. The purchase market, it remains to be seen. We are only one week into this.”
Haynes helped place a family in North Redondo this week, but it was an unusual circumstance because it was the family of a pastor who already had a connection to the area. The client is letting the family start moving in before the lease is even finalized, and both Haynes and the leasing agent are waiving commissions and fees.
“They have a two year old and a second baby due in two months,” he said. “These are huge decisions that they have to make. And what are all these families with preschool through eighth grade going to decide to do regarding where to send their kids to school? The pastor, because he was working at a Hermosa-based church [previously], could make a quick decision.”
Haynes knows another property on Academy Hill, near Chadwick private school, that isn’t even on the open lease market because the owner has multiple friends from Palisades who are interested. And that will be another component of the market, families of private school kids, that will likely bring some Palisades families to Palos Verdes.
“There is so much emotion,” Haynes said. “People are trying to find just where they can be for a week or two weeks, be it with family or an Airbnb in Palm Springs. It’s hard to make huge sweeping decisions, and Manhattan Beach and Hermosa Beach are easy, where it’s a similar lifestyle to the Palisades. I think the demand will come to North Redondo to South Redondo to Palos Verdes and beyond, but it is going to take some time for people to make huge, life changing, multi-year decisions on where to lay roots.”
While the lease market is already frantically in play, the purchase market impacts will unfold more slowly. But even in home sales, the impacts are already discernible. Fratello, on his MB Confidential blog this week, identified a five bedroom home in the Tree Section of Manhattan Beach that was first listed last June at $5.499 million, but after going unsold for four months dropped to $5.199 million and was listed on MLS as sold on January 7, the day of the fires. On Monday, it fell out of escrow, and went back on the market at $5.399 million.
“For a listing that has been on the market for 7 months, and has just endured the minor trauma of falling out of escrow, you would not expect to see a price increase,” Fratello wrote. “But if a seller is looking ahead to what the Manhattan Beach real estate market might become, well then, a price increase may be logical.”
Another five bedroom home in East Manhattan, on 5th Street, had been visible to Realtors on MLS site under the “coming soon” status at $4.9 million, Fratello noted. But when the home officially hit the market on January 13, the price was $5.6 million.
Haynes believes it’ll take at least a few months if not longer to see what the real impacts on the purchase market will be. He is reminded of the surge that occurred after the first wave of the pandemic.
“Market forces will work out the prices,” he said. “If the demand is there and the inventory isn’t, there’s nothing that’s illegal if prices go higher, much like we saw in COVID. COVID hit in February 2020 and the Spring market, our hottest time, completely died, because no one knew what was going to happen, and they were scared. And then low interest rates brought everyone back the summer of 2020 and it surged. So who knows? We could have kind of a slower start, because people are sorting out their lives. Does that surge come three or four months later, much like COVID? That remains to be seen. We have no idea.”
Part of the equation is those Palisades families who need to wait until they see what their insurance will pay. The very wealthy will be the first to buy elsewhere, but most are first seeking temporary housing, then they will try to make sense of what their financial resources will be. Carew said that most have the California FAIR Plan, the basic insurance of last resort, but that may not be enough.
“I talked to a friend of mine up on the West Side, and he was telling me about one of these ultra rich people [in the Palisades], his house was worth $138 million. It burned to the ground,” he said. “And the question was, because most people have the California FAIR Plan, but there’s a maximum of $3 million payout on that, I believe. So if your house is $10 million, well, are you just out the other seven? And I think the answer is yes, you’re just out the other seven.”
What is clear is that the fires across the bay will have deep and lasting impacts on the South Bay. The fabric of the community will soon be weaved with people who have arrived in a time of terrible distress, looking for a home.
“Put yourself in their shoes,” Haynes said. “I mean, I’ve got a family of kids in schools in Palos Verdes, and I’m like, ‘Man, if all of the Hill burned down, we would have to make three to five year decisions. Where are we buying? Are we renting for five years? Where are the kids going to go to school?’ And I’ve got preschoolers, whereas I can only imagine if you had an eighth grader, you essentially are trying to figure out where they are going to high school, and by the time you move back to Palisades they are in college. So these are huge, sweeping decisions that I think are very hard to measure in just one week.”
On Tuesday, Carew was up in Hollywood Riviera at a property with a view all the way to Malibu. Looking north, the sky was oddly clear.
“It’s kind of weird today, here. It is just an absolutely gorgeous day,” he said. “It’s blue sky as far as you can see ….I don’t know why you can’t see any smoke, because the fires are 15 miles in that direction. It’s hard to even conceive of what is happening 15 miles away. What they’ve gone through on the Palisades is unimaginable.” ER
