Daunting Challenges Await Those Trying to Rebuild after L.A. Fires

For the Ramirez Sisters, a Decade of Scrimping and Saving Went Up in Flames

It took a decade of scrimping and saving for the Ramirez sisters to buy their first house, a fixer-upper in Altadena. Nine years later, they bought another, and after a few more years, a third, all within a few blocks of each other.

By 2013, the three single women all had their own homes, and they enjoyed watching their properties rise in value to more than $1 million each — the kind of wealth that their immigrant father, a California bracero, could never have imagined.

Now, after the Los Angeles fires burned all three homes to the ground, the Ramirez sisters are back to square one.

They are once more living together in one house, a four-bedroom short-term rental in San Fernando, paying almost $8,000 a month. And they’re again pooling their funds as they look to buy a house together: Their goal, just as before, is to continue living together until each of them rebuilds her own home — and regains the wealth they have lost.

Underinsured and Underprepared

To begin with, like the owners of many of the almost 12,000 homes destroyed by the fires, the Ramirezes are likely to find they’re underinsured. Their policy coverage limit may not be enough to rebuild similarly sized houses on their lots, or their final settlement may be negotiated down to less than what they might otherwise get, which is common.

After previous California wildfires from 2013 to 2020, almost 40% of homeowners’ insurance claims were underpaid, with households receiving settlements that were 28% lower than the expected rebuilding costs, according to research by Federal Reserve Bank economists in San Francisco and Philadelphia. The gap may be even bigger today because of the expected surge in cost due to unusually high demand for contractors and supplies.

The Rebuilding Process: A Long and Grueling Road Ahead

The cleanup alone will take many months. The Ramirezes will need to take out a loan on top of the mortgages they already have on their incinerated houses. Losing a house in a fire or other disaster does not cancel a preexisting mortgage. So rebuilders may need to work more or longer than they had planned in order to meet the extra expenses. And the rebuilding process will be long and grueling, further complicated by the Trump administration’s crackdown on unauthorized immigrant workers who are a critical source of labor for construction and other industries.

The Impact on Wealth and Community

The destruction caused by the Palisades and Eaton fires is staggering. Total economic damage has been estimated as high as $250 billion.

What homeowners lost is certainly in the tens of billions of dollars. Some didn’t have fire insurance at all. Many of those who are covered saw a substantial part of the equity that they had amassed over many years suddenly vanish.

For most people, the home is their primary asset, their nest egg and source of financial security. It’s also the foundation of generational wealth — wealth that could be passed on to their children for education, raising families, starting a business, and other things that can make future generations stronger and more secure.

Challenges Ahead

The question facing both individuals hoping to rebuild and the larger communities they belong to is whether, and how widely, that dynamic prevails after a catastrophe as enormous as the L.A. County fires.

“Those homes represented social stability and transferred wealth in a multiethnic community,” said G.U. Krueger, a longtime Los Angeles housing economist who has done work for the California Public Employees’ Retirement System, among other clients.

“Grandparents, parents, and their children could support each other through their life stages in celebrating their successes and helping in times of economic and social stress,” Krueger added. “They represented a haven of stability in a chaotic world, which could soon be a utopian memory.”

A Tale of Two Neighborhoods

In Altadena, the heart of the Eaton fire, some 6,000 homes, or about 40% of all residential units, were destroyed, according to census data and a Times analysis. Before the fires, it was a middle-class city with mostly older homes (built before 1960) and a diverse population of 43,000 that was about half Latino and Black.

Many bought into the community decades ago when it was far cheaper, and over time experienced significant appreciation. As of December, the average price of a home in Altadena was about $1.2 million, a fivefold increase from 2000, based on data from Zillow.

Most have substantial equity in their homes. Some have paid off their loans, or nearly so.

Rebuilding in the Palisades

The Palisades fire, by comparison, destroyed more than 5,500 homes, about 60% of all residential units. The city of 21,500 is older (median age 47), richer (median household income over $200,000) and more than half of the houses were built after 1960.

Palisades home values, on average, have more than doubled since 2010 to $3.7 million. With an average mortgage balance of $1.7 million, the typical owner had racked up $2 million of equity wealth as of last year. Its residents include the rich and famous, as well as other well-to-do individuals who have personal resources to rebuild.

Government Aid and the Rebuilding Process

Government disaster recovery aid from the Federal Emergency Management Agency and elsewhere is supposed to lessen the chance of that happening, but financial assistance is often slow to arrive.

“Unfortunately, we have a housing recovery system that is extremely broken from a policy perspective and it gets worse the further down the income and wealth ladder you go,” said Andrew Rumbach, a senior fellow with the Urban Institute think tank.

After the Tubbs fire in 2017 destroyed more than 2,600 residential properties in Santa Rosa, the city made extraordinary efforts to manage the rebuilding process and hired an outside firm to help with permitting and other logistics. Even then, more than seven years later, one-fifth of what was lost has still not been reconstructed, according to the city’s recovery data.

Conclusion

The Ramirez sisters are bracing for a long haul but are determined to rebuild. “We’re not going anywhere,” said Teresa, recalling how their father first came to California from Michoacan, Mexico, in the early 1960s under the U.S.-Mexico bracero program for temporary farmworkers.

FAQs

* What happened to the Ramirez sisters’ homes?
Their three homes were destroyed in the Los Angeles fires.
* How much did they lose?
Each of their homes was worth over $1 million, so they lost a total of $3 million in equity.
* What are they doing to rebuild?
They are trying to buy a new house together, with the goal of rebuilding their separate homes in the future.
* How are they coping with the loss?
They are trying to stay positive and focus on the future, but it’s a difficult and emotional process.
* What is their goal for the future?
Their goal is to rebuild their lives and their homes, and to create a new sense of normalcy.
* How can people help?
People can help by donating to the GoFundMe page, which will help the sisters cover expenses while they rebuild. They can also spread the word and share their story to raise awareness about the impact of natural disasters on families and communities.