Oceanfront Malibu homes burned to the ground after a wildfire tore through the area seven months ago.
Some of those now-empty plots are now selling for millions.
Although the seven-figure price tag for a lot with no house might feel exorbitant, real estate agents told Business Insider that these properties are still big-ticket purchases, even in the face of natural disasters and reluctant home insurers.
“They’re not making any more beachfront properties,” Josh Flagg, a real estate agent in Los Angeles, said. “There are only so many properties available, and the smart people will be taking these lots now before the demand picks up, which it inevitably will.”
Plumes of smoke rose above Los Angeles County in January after a wildfire burned much of Pacific Palisades, an affluent neighborhood nestled near the Topanga State Park. Over 24 days, the wildfire ripped across almost 24,000 acres, destroyed over 6,800 structures, and damaged nearly 980 others. More than 200,000 residents were forced to evacuate during the Palisades and Eaton fires.
Structures along the Pacific Coast Highway in Malibu that overlooked Las Flores Beach were among those affected. Flagg is now selling a 6,200-square-foot empty lot with direct beach access and ocean views for $2.75 million. The property was originally listed for sale in 2023 for $3.44 million and again this May for $2.99 million.
“Before the fires, it would not have been possible to buy on the beach in Malibu at a price this low,” Flagg said.
A separate plot of land found down the road is listed at $3.55 million in June after selling in 2023 for $4.85 million.
Tami Pardee, founder and CEO of Pardee Properties in Los Angeles, said the price was worth it for some homeowners. “You’ve got a world-class coastline on one side and the Santa Monica Mountains on the other, perfect for surfing, horseback riding, hiking, private beaches, and those unreal sunsets.”
“Malibu lives at the intersection of raw natural beauty and refined privacy. It attracts everyone from creatives to CEOs, but still feels like a small town,” Pardee told Business Insider. “That blend of casual luxury and connectedness makes Malibu different.”
Pardee said those perks, along with the limited supply, are why those houseless oceanfront properties cost so much.
“Strict coastal regulations and limited land keep inventory low, which keeps value high,” Pardee said. “That’s why seven and eight-figure listings aren’t the exception. They’re the average.”
That still applies, Pardee said, even for fire-damaged properties perpetually threatened by natural disasters, rising sea levels, and erosion.
“It’s all about the land. If a burned home is listed for millions, the structure isn’t what’s driving the price. It’s the lot,” Pardee said.
However, it’s not just money or natural disasters that potential homeowners must navigate.
Home insurers are dropping coverage as the threat of wildfires grows
As the Palisades Fire and others tore across Los Angeles County, home insurance companies landed under the spotlight.
Business Insider reported in January that since 2022, some insurance companies have stopped writing new policies, cut back coverage, or altogether dropped California residents as wildfires and other extreme weather events become an increasingly unavoidable reality.
Max Dugan-Knight, a climate data scientist at Deep Sky Research, told Business Insider that some home insurers’ decision to weed out Californians is “precarious.”
A report published by Deep Sky Research in June found that 1 in 5 homes located in “extreme fire risk areas of California” have lost coverage since 2019. Home insurance premiums, meanwhile, rose 42% in California’s “most fire-prone areas” since 2009.
“If insurance companies are worried, we should all be worried,” Knight said. “They have the most advanced modeling, they have the latest data, and they are highly motivated to get this right, because if they don’t, they risk their entire business.”
Knight said buying property is a long-term investment, one that some Californians may not be able to secure due to the lack of available insurance.
“One of the first things the mortgage lender will ask is, ‘Do you have home insurance?'” Knight said. “If you cannot afford home insurance or it’s simply unavailable in your area, then the lender will almost certainly not approve your loan, and that buyer will exit the market. That will happen to lots of buyers simultaneously in these high-risk areas.”
“If you can’t sell a property, the value goes down,” Knight said.
Locals who can’t obtain insurance from traditional companies often rely on California’s FAIR plan, a syndicated fire insurance pool established in 1968. But that’s not always enough.
“Most homeowners and buyers end up turning to the California FAIR Plan, which is basically a last-resort option,” Pardee said. “But the coverage limits are low, especially for Malibu’s higher-end homes, and that leaves a big gap.”
Pardee said some buyers try to “piece together multiple policies through specialty brokers. But even then, it’s not guaranteed.”
“It can be incredibly expensive, time-consuming, and sometimes not even possible,” Pardee said. “We’re talking about people who can afford multimillion-dollar homes who are still struggling to get the right coverage.”
Knight added that cutting emissions is critical, but Californians and many others will still likely face the fallout of the climate crisis.
“If a buyer is paying any attention to that, they might think twice about buying in a high-risk area,” Knight said.
For now, beachfront properties in Malibu remain a hot commodity
Even with wildfires and insurance issues, Pardee said most people searching for homes in the area understand the risks.
“In Malibu, most buyers know the terrain, both literal and emotional,” Pardee said.
Pardee said the lifestyle and outdoor living in the area outweigh the risks for most potential homeowners.
“Malibu has dealt with fires for decades. It’s part of the rhythm here, and buyers come in with their eyes open,” Pardee said.
So far, Flagg said several people have expressed interest in the $2.7 million plot of land.
“Buyers will have the opportunity to build from scratch,” Flagg said, adding that a disaster recovery initiative by Los Angeles County can also expedite the permit process.
More than 800 homeowners in Pacific Palisades, Altadena, and other affected areas have applied for rebuilding permits, according to a July report by The Los Angeles Times.
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