After the devastating wildfires in Los Angeles have finally come to an end, the real challenge for the local real estate market is just beginning. The moment of truth for the City of Angels lies ahead, as it faces the question of whether it will rise from the ashes. While it may be premature to draw conclusions at this point, it is surprising to see records of property sales emerging in the disaster-stricken area. How are sales going? Can one really find bargains when looking to purchase severely damaged properties? What should one be wary of? Let’s delve into it together!
Let’s start by examining a sales case in the burnt area of Eaton: 95 W. Calaveras Street. On the map, the property can be seen as a pile of ashes due to the fire, yet miraculously, the house next to it appears untouched. The property at 95 was previously used as a rental property, but after being destroyed by the fire, the landlord listed it on January 30 for $449,000, significantly lower than its previous selling price of $965,000 in 2023.
However, in less than two weeks on the market, it sold for a cash offer of $550,000! It’s astonishing that even though there are no structures left on the 9,109 square feet of land, it was still sold for $550,000. According to the selling broker, the attractive listing price of $449,000 drew up to 20 inquiries per day, and the flat and well-located land held significant value for developers or property investors looking to renovate.
Despite this, the selling broker was surprised to receive offers exceeding $100,000 from the initial $449,000 listing price.
Let’s do a simple calculation here: assuming a 2,000 square foot house would be rebuilt on this land, with a rebuilding cost of $500 per square foot, the total reconstruction price would be $1 million. Adding the land cost of $550,000, it would be reasonable to list it at $2 million for resale.
According to local real estate brokers, California has some of the strictest building regulations, coupled with existing labor shortages, leading to potential rebuilding costs reaching around $500 to $600 per square foot. This means that purchasing a plot for a 2,000 square foot house would start at $1 million.
Moving on to another fire-damaged property, 17126 Avenida De La Herradura, with a land area of 9,932 square feet. This property, where a 4-bedroom, 3-bathroom residence once stood, now lies in ruins. Records show that the original owner bought the house for $1.54 million in 2005 and only recently listed it for sale on January 16 for $999,000, opting for a quick sale without considering reconstruction.
The property found a buyer shortly after being listed, with the price exceeding a million dollars, and the transaction is currently in progress. The selling broker mentioned that the buyer is an investor from out of town, who was located through numerous phone calls.
Would you dare to buy a ruin for $1 million? The Los Angeles fire victims selling burned properties are throwing bargains. What should one be cautious of when looking for discounted fire-damaged houses?
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