The devastating Palisades and Eaton fires have left a lasting impact on communities, infrastructure, and the construction industry in Southern California. As rebuilding efforts begin, the architectural and construction supply chain faces significant challenges, including labor shortages, material constraints, extended project timelines, scheduling difficulties, and increased demands on city resources. And while we wait for the rebuilds to begin the existing rental and housing market facings its own supply chain constraint. Understanding these impacts is crucial for homeowners, contractors, architects, realtors, and industry professionals as they navigate the rebuilding process.
One of the most immediate consequences of the fires is the strain on the existing housing market. Los Angeles in particular was already seeing issues with available units for sale or rent due to the recent increase in interest rates and rents in the area. As inventory decreases, we expect families, who can, to move away from the area for the next 6-12 months as they navigate rebuilding, or relocate permanently where insurance payouts are not enough to allow some families to rebuild at all. We are not sure how this will impact the future value of homes in these areas, or what the inventory for sale will look like prior to and after rebuilds have taken place.
The second area of the process where we expect to see supply chain constraints is within the construction labor market. Skilled tradespeople such as carpenters, electricians, and masons are in high demand, leading to increased wages and labor costs, and limited availability for skilled workers or industry experts like engineers as they will be stretched across an increasing number of projects all on the same schedule.
The demand for building materials has already been on a steep incline since Covid-19 struck in 2020 triggering a strain on the construction supply chain that we are still in the middle of. Adding to that, the increased interest rates for loans in the past two years has compounded this as more people are choosing to expand their existing home rather than buy into a larger one. Now, the added strain on the construction supply chain, specifically for materials, from the recent fires will continue to force prices to go up and lead times for specialty items to lengthen. We expect to see this impact specific materials like lumber, concrete and steel, with those prices increasing in the coming months. We expect specialized custom order items like fire-resistant doors and windows, metal roofing materials, and certain fence and deck materials like trex to not only go up in price, but to potentially take more time to deliver, forcing rebuild timelines to push out in compensation for this supply chain impact.
The good news is that while the City of Los Angeles, alongside the state of California, may not be able to keep prices where they are, they are putting teams and resources in place to try and mitigate this timeline risk facing homeowners. A new team is currently being put together, with independent locations, specifically to assist fire victims with getting permits and inspections faster than normal, bypassing longer drawn-out approval processes that historically have run consecutively, those will now run concurrently allowing approvals for electrical, structural, etc. to all happen at the same time.
As of today we do not expect any major changes to zoning, building codes or repair regulations in the Palisades or Alta Dena areas. The main restriction we are aware of is the city is giving a limit of 110% as the maximum someone can rebuild to from a size perspective, so for those looking to max out a lot, add a second story or addition you may run into a longer timeline in those instances. But if you are comfortable with rebuilding within 10% of your original footprint we do not expect delays from this standpoint.
An area that is currently unknown is the city resources and timeline to rebuild the foundation of these areas. The infrastructure like roads, power grids, septic systems, public utilities and the removal of waste and debris is currently a moving target as several local and federal organizations work towards completing these jobs. This will be a timeline that the entire supply chain for rebuilding will be up against and at the mercy of across the board. The good news here is that because of the size of this disaster there are several very powerful and capable organizations supporting this rebuild, which we have confidence will push these repairs forward fast. It is in no one’s best interest to have thousands of displaced families being displaced any longer than they need to be. If you want to track the progress of your area click here.
Our recommendation for preparing and getting ahead of the delays and price increases is to start now. Secure your temporary housing, find the school or childcare you need if you need them, stabilize your work remotely as needed, and ensure your core foundation is stable. Then get a handle on your options after working with insurance and goverment agencies who are supporting fire victims (i.e. FEMA, etc.) and hire your team to start the rebuild process. While these obstacles are significant, proactive planning, adaptability, and collaboration with industry professionals and city officials will be key to successfully restoring affected communities.And lastly give yourself some grace, allow yourself to grieve and be human, and know that your community is here to pick you back up as we all push forward into unprecedented territory together.