Further, even for those who get an insurance payout, who is going to insure them to rebuild on the same piece of property? They could get started framing the house, and next week the winds could kick up again and the frame of the new house could burn all over again.
Then there are the large number of people NOT insured who still also owe money on their mortgage. They can't afford to rebuild and they have nowhere to live and since they have to pay the old mortgage do not have money to also pay even a 1 bedroom apt rental price in that area, if they could find one because that type of housing mostly doesn't exist in that area.
Then also for many the only reason they could afford to live in those neighborhoods was because they had some kind of high paying job in the area. Does this job still exist? If not, will they be able to find a job at anywhere near their old salary if say they are a 50 year old mid level producer on some TV show? You are going to have some real sob stories of people who on paper were 1%-ers with a $3M house and $300K job whose insurance was cancelled last year and now are homeless and bankrupt with no job and still have $2M left on their old mortgage to pay off. There's no housing in the area near their old job even if it still exists. The only thing they have left is the Mercedes they drove away in, their other cars all burned up with the house. They still owe money on the Mercedes too.
Corollary to all of this is the RE market there is going to be totally in the toilet. Anybody with half a brain who does get a insurance payout won't rebuild, they'll take a chunk of the money to clear the debris and then put the bare land on the market at (literally) firesale prices. Maybe Hedge Funds will snap up properties on the cheap this way, but I'm not sure even Hedge Fund mgrs would want to risk buying bare land there. Anyhow, otherwise after cleaning up and putting the property up for sale, the smart former Hollywood resident will take the rest of the insurance payout and GTFO of Dodge and buy a nice house in Missouri for !/10th the price of their old Hollywood house and just as big.
On top of all of this, the event really isn't even over. High winds are expected again next week, the current fires are 50% contained or less and new fires can start anywhere that hasn't burned yet. Los Angeles could burn for the rest of February. Probably not and it's already a wipeout, but it could.
Finally, at some point this going to bleed over into the rest of the economy and CA will be in a mega recession/depression. This in turn will affect the national economy. LA was of course already just packed with homeless people, now you have instantly made another say 50K homeless and simultaneously removed housing stock AND made it more difficult to do any rebuilding.
Basically, for Los Angeles, IT'S OVAH! The Fat Lady has sung. It has COLLAPSED and it won't recover. It's going to be the West Coast Detroit in no time.
https://www.bloomberg.com/graphics/2025-los-angeles-wildfires-insurance/?utm_source=newsshowcase&utm_medium=gnews&utm_campaign=CDAqEAgAKgcICjDi7PAKMIXduwIw3bXXAw&utm_content=rundown&gaa_at=la&gaa_n=AVINqTxN7WjdAMLpvyQtRijVaMaACpPPYcK3ivqUTxHP7_SfWuAWHsqdrOpN0jys5JWQDhepj9-0LqJx9qCo1a4LhT0-&gaa_ts=6782b317&gaa_sig=8CdktzwjmGNNTuzFQSnPzsDpoPk36iqQf5uvNWrnTHSoxCSrI0sCIZ0Rmd-1EQslSnMos7TOcK2m098_7MJq2g%3D%3D
LA Wildfires Push California Insurance Market to Its Limit
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