‘My House And Everything I Own Is Gone’: Wildfires Push LA Real Estate To The Brink

Kitty Wallace is still closing deals.

As uncontained wildfires plagued Los Angeles on Thursday, the vice chair at Colliers Los Angeles had opened her Brentwood home’s doors to three evacuated families. And she knew that if the Palisades blaze kept developing, her household — which now consists of 12 people and two dogs, thanks to the flames — could be the next to evacuate. 

Still, there was business to attend to. On Friday, she’s scheduled to close the sale of three multifamily buildings in Glendora, about 17 miles east of the Eaton fire, as part of a 1031 exchange. The buyer is a local player who watered his house, evacuated and got back to signing contracts via Docusign. The deal must go on, she said.

“Yeah, we’re closing. It’s in the [fire] zone and we’re closing,” Wallace told Bisnow Thursday as she drove to another property tour in Venice Beach. “That’s what we do! We don't have a, ‘Hey, by the way, you're in a fire zone, don't close.’ So you close.” 

Nearly 200,000 people have been forced out of their homes by four major fires that have blazed their way through 29,000 acres of Los Angeles and surrounding smaller cities since Tuesday. At least five people have died, and more than 10,000 structures have been destroyed by the Palisades and Eaton Fires. Early estimates released late Wednesday place the cost of damages at $52B, making them California's most destructive fires in history. 

Easing winds have helped firefighters, but major fires remain uncontrolled Thursday night, with a new blaze, the Kenneth Fire, prompting evacuations in Woodland Hills. 

Bisnow reached out to scores of commercial real estate players in the Los Angeles area who were fighting for their livelihoods, homes and businesses — battling back tears and openly wondering what the next hour or day would bring.

Martin Muoto is among the people who lost everything.

The founder and CEO of SoLa Impact, LA’s largest private affordable housing developer, had lived in The Via Bluffs area of the Palisades for almost 10 years.

“My house and everything I own is gone,” he told Bisnow. “My underwear, my socks, the bike that I spent many hours thinking about and figuring out whether I should buy — it’s all gone.”

He’s staying in a hotel. His 4-year-old thinks it’s an adventure. His 7-year-old is struggling to adapt. He intends to rebuild his home on Via De La Paz but has no idea where they will live in the meantime. 

But he is upbeat and pragmatic — “it was all stuff” — and is back at work, trying to get more housing units on the ground to meet the crisis. 

“I went out and bought the basics and, you know, back at it,” Muoto said. 

Muoto said he is urging the city to provide clarity around how rebuilding can happen. He has recommended that any home built in the last 10 years be granted over-the-counter approval to rebuild. Forcing families to go through the normal lengthy permitting process might accelerate the much-discussed and politicized outmigration of Angelenos.

And while most of the destruction is of higher-income homes, the pain will ripple through LA and will affect the broader real estate industry.

Thousands of people going back to the market to build, buy or rent will drive up the price of housing, Wallace and Muoto said. And it will put a tremendous strain on the supply chain as materials and labor competition increase.

Muoto’s SoLa owns 2,000 low-income housing units in the city and has 3,000 more in various stages of development. It had already been looking at modular to streamline its process, and Muoto said it will be pushing hard to accelerate the construction of its pipeline. He’s worried about competing for labor against people rebuilding in the Palisades. He also said he hopes the banks and the federal government will do something to lower the cost of capital and get rebuilding moving. 

“The fires decimated the homes. Policy could decimate communities,” he said.

John Drachman grew up in Southern California and has first-hand experience with wildfires. When the Waterford Property Co. co-founder was 13 and living in Irvine, he and his family evacuated their home under the blare of police sirens during the Laguna Beach fires in the 1990s.

“We had 20 minutes to evacuate from our home in Turtle Rock,” Drachman said on Thursday in a phone call from his Orange County office. “I remember asking my mom if our house would still be there when we returned. It survived, but that fear and sadness never left me, and it’s heartbreaking to think of what people are experiencing now.”

Drachman said a lot of Southern California’s real estate community lives in the Palisades, and many are now without their homes.

“The destruction is unquantifiable and surreal. Knowing people who’ve lost their homes, including colleagues and friends, is heartbreaking.”

With an asset portfolio north of $1.5B, Waterford has 2,391 existing apartment units in LA County — mostly rent-restricted workforce housing units — and 420K SF of retail and office projects. It has more than 1,000 units of market-rate housing units in predevelopment. So far, Drachman said his assets are faring well, but he knows that could change at any moment. 

“In California, we’re left grappling with questions. Who is to blame? Could anything have been done differently?” he said. “The reality is that these fires keep happening, insurance costs are skyrocketing and there’s a growing sense of hopelessness. It feels like no effective solutions are in sight. I don’t mean to get political, but the outlook right now seems bleak.”

“This disaster should be a wake-up call,” he added. “The regulations for building in areas like the Palisades are incredibly difficult. If there’s going to be meaningful recovery, we’ll need significant reform. Without it, I’m not sure how this ends well.”

And that goes for tenants, too. 

Matt Schodorf and his wife, Anya, founded their coffee shop chain, Café de Leche, in Highland Park in 2008. They had spread to four locations, with the shop in Altadena being their most solid since they purchased the building from their landlord shortly after the pandemic began, he said.

“Altadena was like a rock,” Schodorf said. “We don’t have a lease to negotiate. No one can kick us out. No one can raise our rent. This is our rock, our most popular shop.” 

Schodorf did not see this coming. He and his family were tying down umbrellas and patio furniture so they wouldn’t blow away on Tuesday evening. Wednesday morning they drove toward Altadena with the intention of giving out pastries and coffee to the community and firefighters before they realized that embers were raining down and it was unsafe to get within four blocks of the shop. 

“We saw a car on the road … All you could see were the wheels. The frame, the entire car had been incinerated. It was just laying there smoldering," Schodorf said. 

By Wednesday afternoon, the shop was burned to rubble. Schodorf is optimistic that insurance will pay out for the damages and he can get a pause on paying his mortgage, but he won’t be sure until it happens, he said. He’s yet to have those conversations as he worries about his staff, who will now be out of a job. 

“I’ve never experienced anything like this before,” Schodorf said. “I don’t know what the timeline’s like. We have a mortgage. I don’t know if that’s going to get resolved or if there’s a way to pause it. It’s day two, we’re like 24 hours into it.” 

Schodorf is hopeful for government support in the near future, similar to coronavirus-related financial programs, he said.

“I’m not looking for loan forgiveness here, but like a hold,” Schodorf said. “A pause for a few months for us to gather ourselves and be able to navigate forward. We do intend to rebuild, God willing. Unless something stands in our way, we will.” 

Neville Rhone, managing partner of Los Angeles-based Arc Capital Partners, said that while his company’s properties have not yet been directly impacted, he is concerned that CRE, which this month was starting to reemerge from the pandemic’s cruel toll, will be tested all over again.

Transactions that were a sure thing are now up in the air, at least for the time being, Rhone said.

“It’s hard to imagine that it’s not going to be a 12-to-18-month window of disruption,” he said from his Silver Lake home. “In the best case, on the short end, it takes 18 months to build an individual home. Think about that times 2,000.”

Arc has about 4.4M SF of urban mixed-use, retail, industrial and multifamily properties throughout the U.S., including California and Texas. He said the rebuilding will create a logjam at a very precarious time, given the World Cup coming to LA in 2026 and the Olympics in 2028, he said.

“The resources needed to do this and be coordinated, get permitting, contractors, utilities, subs, all of that stuff … I think this will be a two-year process — at least,” Rhone said. 

More than a few people reached by Bisnow on Thursday sounded exhausted from the muddled balance between their business and the homefront. 

For Dan Bacani, Lee & Associates principal and shareholder, the questions about what the future may hold have to wait. For now, securing his house is more important. 

“I am in the middle of some deals right now, and I don’t know how it is going to pan out,” Bacani told Bisnow as he traveled to his Pasadena home. 

“I can’t get a hold of people. The situation is very fluid. I don’t know where we are at right now across multiple deals. It’s more chaos now than answers. It’s going to take a few days to figure it all out. … I just pulled up to my house. I have to make sure there are no looters here.” 

More than 20 people have already been arrested for looting in the wildfire zones, putting even more pressure on law enforcement and first responders as they scramble to control an escalating crisis that also includes rescue, recovery and finding housing for evacuees who no longer have one. 

A wave of housing construction started after Covid has created a robust inventory that sets the city up well for an emergency like this, Housing Impact Partners co-founder Kimberly Brown and partner Sherri Franklin said. Franklin said it will just take coordination to get everyone’s resources together and get the word out. 

Housing Impact is involved in the development of a few properties that are delivering this month, and it is doubling down to get a few more ready for occupancy next month. It expects to put together at least 1,000 vacant units across the affordability spectrum. Much of that was targeted toward housing high-acuity homeless individuals, and the pair said striking a balance between maintaining that momentum and meeting this crisis, which has created thousands of homeless evacuees, will be crucial. 

They said they aren’t concerned about a run-up in pricing for existing housing. The city will issue a mandate against price gouging, and Franklin said she thinks property owners will want to help their community — and their units need residents anyway. 

She said rebuilding and rehousing everyone will be a moment for the real estate industry to be a part of the immediate solution.

“This is a time when real estate developers can come together and be of support to the city,” Franklin said. “It's a good time for us all, no matter who you are as a developer or housing or property owner, to really step up to the plate.”