Pacific Palisades Wildfire
Housing-Market Recovery & Investment Return
The Investment Thesis
A short-term market dislocation in a Tier-1 coastal sub-market has created a strategic 18-24 month acquisition window. Historical precedent and projected rebuild velocity suggest a significant value uplift, with median prices expected to rise approximately 30-50% above pre-fire levels within five years.
Pre-Fire Median Price (May '24)
$3.30 M
Projected 5-Year Target
$5.5 M
Potential Uplift vs. Pre-Fire
+50%
Pacific Palisades Price Trajectory
The market showed a consistent +7% CAGR before the fire. A brief, predictable dip followed, with prices quickly rebounding as luxury comps began to reset the median. This volatility signals the entry point.
Comparable Wildfire Recovery Cycles
Analysis of similar luxury coastal markets shows a clear pattern of value appreciation post-recovery. Malibu's Woolsey fire and Sonoma's Tubbs fire both resulted in median prices exceeding pre-fire levels within 4 years.
The Path to Recovery: A 5-Year Timeline
Phase 1: Shock
(Months 0-12)
Debris removal, insurance friction, and a 30-40% drop in sales volume create a risk discount and depress lot values.
$3.2M – $3.5M
Phase 2: Rebuild Surge
(Months 13-36)
Permitting accelerates, new construction begins, and limited inventory from new, code-compliant homes drives demand.
$3.8M – $4.2M
Phase 3: Stabilization
(Months 37-60)
Over 70% of units are delivered, buyer confidence fully returns, and wealth inflow targets upgraded, modern housing stock.
$4.8M – $5.5M
Investment Scenarios & Projected Returns
| Case | Buy Price | Rebuild CapEx | Exit Price | Gross Multiple | Levered IRR |
|---|---|---|---|---|---|
| Conservative | $3.25 M (-12%) | $1.0 M | Yr 5 / $4.8 M | 1.35x | 14% |
| Base Case | $3.10 M (-16%) | $1.1 M | Yr 4 / $4.5 M | 1.45x | 19% |
| Stretch / Assemblage | $2.20 M / lot | $1.3 M | Yr 7 / $5.5 M | 1.60x | 24% |
Projected IRR by Scenario
The investment strategy delivers compelling returns, with a base case IRR of 19% and significant upside potential in a bulk-lot assemblage scenario, justifying the near-term risk.