By MICHAEL EDLEN | Special to the Palisadian-Post
Two months after the devastating Palisades fire destroyed nearly 70% of the structures in our community, the real estate market finds itself in uncharted territory. What was once a marketplace primarily focused on improved properties has transformed into one dominated by vacant lots, creating unique challenges for buyers, sellers and real estate professionals.
The New Reality: Land Value Variables
Before the fire, property values in the Palisades were primarily based on improved structures using price-per-square-foot metrics. Today, with dozens of vacant lots hitting the market simultaneously, we’re witnessing the emergence of a more nuanced valuation approach considering multiple location-specific factors.
Location relative to the Village area remains a primary driver of value, with properties closer to town generally commanding premium prices. Meanwhile, properties several miles up in the Highlands typically sell at discounts due to their more remote location.
Even within central areas, significant differences exist—some sections, such as the Alphabet Streets, feature smaller lots on narrow streets. In contrast, others boast larger parcels with wider streets and underground utilities, as in the Huntington.
Views continue to command significant premiums, regardless of proximity to the Village. Similarly, flat, usable space on hillside lots dramatically affects value, with some large hillside properties offering surprisingly little practical building area.
Lot sizes typically range from approximately 4,500 square feet (considered almost substandard) to 18,000 square feet, with outliers reaching 50,000 square feet. These larger parcels represent special cases and don’t generally influence standard market valuations.
Current Market Metrics
The current marketplace reveals interesting pricing patterns. At the time of this analysis, 30 vacant lots are currently listed between $1.5 and $6 million, with an average list price of $382 per square foot. Meanwhile, eight properties under contract range from $1.4 to $4 million, averaging $277 per square foot.
Contrary to expectations based on other post-disaster communities, where initial value drops of 25 to 35% were common, Pacific Palisades appears to be experiencing more modest reductions—approximately 10 to 25% below pre-fire values after eight weeks. This suggests stronger resilience than initially anticipated, though market conditions continue to evolve.
However, people cannot simply multiply an average price per square foot by their lot size to calculate a realistic expectation of current value. Because of the numerous intertwined factors mentioned above, the value may be significantly greater or lesser than one assumes.
Understanding Buyer Motivations
Understanding their motivations has become more critical in counseling potential buyers. Different buyer profiles approach this market with vastly different goals:
- Existing residents seeking to rebuild often prioritize familiar neighborhoods, proximity to friends who survived the fire and emotional connections to the community.
- Newcomers seeking opportunities may focus more on value metrics and long-term appreciation potential.
- Investors primarily evaluate acquisition costs against potential returns after development.
Each group weighs variables differently, making tailored guidance essential for successful transactions. What represents excellent value for one buyer might be unsuitable for another based on their specific circumstances and goals.
Timeline Realities
One crucial factor affecting property decisions is the realistic timeline for rebuilding. At minimum, most new construction projects will require two years to complete, with many potentially extending to three to four years due to labor shortages, permitting backlogs and the sheer volume of simultaneous projects.
Buyers and existing owners must consider whether they’re prepared for this extended timeline. For some—particularly those with immediate housing needs or limited temporary accommodations—the prospect of such a wait may tip the scales toward purchasing existing structures elsewhere rather than rebuilding. Also, many of our “seniors” don’t feel that emotionally they can go through that process.
The Value of Local Expertise
With so many variables affecting land values in the post-fire Palisades, expert guidance has never been more valuable. A seasoned local real estate professional can provide crucial insights about:
- Neighborhood-specific value information
- Hidden opportunities in less obvious locations
- Potential complications with specific lots
- CC&R and view protection restrictions that might limit building options
- Historical knowledge about traffic, drainage or soil stability issues
For sellers, expert representation means effectively communicating their property’s unique value proposition compared to the numerous other available lots. For buyers, it means avoiding costly mistakes and finding the optimal match for their specific needs.
Looking Forward
Pacific Palisades faces a massive rebuilding effort estimated at $50 billion over the coming years. This includes residential structures and our community infrastructure, park facilities, library, commercial areas and utilities—much of which will take years to complete.
Those entering this complex marketplace, whether as buyers or sellers, will navigate more successfully with knowledgeable guidance. While algorithms and general market data provide useful baselines, they cannot replace the nuanced understanding of someone who truly knows each street, view corridor and neighborhood characteristic in our unique community.
As the Palisades rebuilds, those who make decisions based on expert local knowledge will be best positioned to achieve their real estate goals amid these unprecedented circumstances.
The Edlen Team has been monitoring the local market at least twice every day since January 10 and has been building a database of lot value records to understand the emerging trends of the marketplace better. They have distributed dozens of newsletters with current information about the post-fire issues and resources. They can be reached at info@edlenteam.com or 310-600-7422.
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