After the Fall

House rich, cash poor: the 3 cities with the longest
tenured home ownership have astronomic house prices.

We are in that fortunate group of Bay Area homeowners who bought their homes in the late 20th century. We stretched to make the purchase in the hundreds of thousands of dollars, and in 2025 our houses could well have a market value of $2 million or more. As I've heard many middle-class homeowners marvel, "I couldn't afford to buy my house today."

Some Pacific Palisades homeowners had similar good fortune but have seen it all disappear this past week:

The fires also wiped out the homes of Californians in the middle class who bought into affluent neighborhoods decades ago, when the properties were still within reach for teachers, plumbers, and nurses. After years of rising home values, many of them have the bulk of their wealth tied up in homes that are now ash...

Now, those middle-class homeowners face a crushing housing crunch. Los Angeles was already experiencing an acute shortage of homes. Its real-estate prices are more than double the national level. In the wake of the fire, thousands of people desperate for temporary housing are flooding a cutthroat rental market, where bidding wars are breaking out for leases. Some are considering leaving for good.

Then there is perhaps the most daunting prospect of all for those who have lost their homes: battling with their insurance companies to rebuild...

For those who lost their homes, much of the value of their properties is in the land they still own, but rebuilding on it will be a long and expensive process. It’s unclear how many homeowners in these areas lack insurance or are underinsured. A number of leading insurers have stopped selling new home-insurance policies in the state. State Farm said last year it would not renew 69% of its property policies in the Pacific Palisades.

From an objective standpoint these fire victims are not worse off than the poorest members of our society. However, their precipitous fall is frightening to those of us who identify with them. There but for the grace of God go I.