After the Los Angeles Wildfires, the Rich Will Rebuild Even Bigger

Infernos transformed Bel-Air and Malibu from bohemian communities into wealthy enclaves. Now they’re about to become even more rarefied.

Justin Sullivan/Getty

LOS ANGELES—As frightening as the recent Skirball fire appeared in pictures, for long-time residents of Bel-Air, it was nothing compared with the horror of 1961. 

The more recent fire— which started under the 405 and snaked south down Bel Air Crest past the Getty— destroyed six homes and damaged a dozen more. By comparison, the '61 blaze started as brushfire and fed on since-banned wood shingled roof tiles, shooting right down Bellagio Road into Brentwood and Malibu. That fire took down some 600 homes as it spread, many of them owned by such entertainment industry luminaries as Burt Lancaster, Joan Fontaine, and Some Like It Hot's Joe E. Brown. “My three dark minks, my white mink, my sables…gone,” said a grieving Zsa Zsa Gabor, before returning to the ashen remains of what had been her house, a 10-carat diamond ring gracing her hand as she clutched a shovel.

The furs were a tragedy no doubt (indeed, Life's spread on the event was titled "A Tragedy Trimmed in Mink"), but the house? Gabor and the other stars were able to rebuild. And as is almost always the case in these types of disasters, the new places tended to be twice the size of the old ones, if not bigger.   

"Some prime real estate burned from Stone Canyon over to Malibu, and in most cases, much bigger, more expensive houses replaced what had been there," says entertainment lawyer and Bel-Air residential activist Joseph Horaceck III, whose parents lived above the Gabor property and were spared by the fire. "[Zsa Zsa] built a 12,000-square foot house replacing what probably had been a 6,000-square foot one. But they had good size lots back then that could handle it. And while a lot of people rebuilt big, they built residences, not party houses."

These fires happen to be hitting the hills of Los Angeles, Ventura, and Santa Barbara counties at a time when houses being built in those areas more closely resemble James Bond villain hideouts than traditional single-family homes. Indeed, Zsa Zsa's 12,000-square foot rebuild would fit snugly on the roof decks of some of the so-called houses being built in her same neighborhood today. While you think Bel-Air has already been plagued by a rash of super-sized McMansions, experts and residents things fear that things may get even worse after the fire.

"On the high end, people just are not worried right now," says Paul Margolis, a luxury real estate specialist at Rodeo Realty in Beverly Hills. "The market is very robust. I have seen a little bit of a correction in the plus $10 million range, but there are a lot of motivated buyers from the million to $10 million range. Lots of people from other places are looking to get into this market and many of them are paying cash. We will only be getting more of that now."

For long-time residents like Horaceck, it is a reality with which he is all to familiar. One of the prime targets of long-time residents like his ire is real estate developer and model progenitor Mohamed Hadid. Hadid was unable to complete his 30,000 -square foot Strada Vecchia Road ultra-mansion when the city discovered that the property had not been permitted for, among other things, the IMAX theater it contained.

Another favorite topic of conversation among locals? Nile Niami's $500 million plus 100,000-square foot plus compound replete with a casino, a lounge with walls made of jellyfish tanks, and a disco with its own separate VIP area. 

"That's the room for the people who are really your friends," says Horaceck, dryly.

While the Skirball fire— which either ironically or fittingly was a direct result of the city's homelessness epidemic— struck a part of Bel-Air in which developers have shown less interest, the likelihood is that in this market, investors will see the limited destruction it wreaked as more opportunity than warning.      

"These home buyers never ask, 'When was the last fire?' says Margolis. "People are in willful denial. It feels a little bit like the subprime mortgage problem: as long as everyone shares in the same willful denial, it all works. As soon as trust is eliminated, the whole thing falls apart and it is a disaster."

These home buyers never ask, ‘When was the last fire?’ People are in willful denial.
realtor Kevin Paffrath

You could also see a different kind of willful denial playing out in the less rarefied air north of Bel-Air. There the still burning Thomas fire has scorched 242,500-acres (at the time of writing) to become the fourth largest fire in the state's history. Driven by the kind of reckless winds the Southland more typically sees in September and October, the blaze has destroyed in excess of 900 homes in Ventura and Santa Barbara counties since first sparking on December 4.

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"The amount of complacency in this part of Southern California has been startling," says Kevin Paffrath, a Ventura County based broker and real estate manager. "In Ventura County, we had not seen a wildfire burn a structure in such a long time, that it is like we all forgot. Most people got the warning on their phones and thought, 'Well that is annoying.' It wasn't until we all saw it coming down the mountain that we thought, 'Uh-oh, this one is different.'"

While the tax bracket may be different in Ventura relative to Bel-Air, expect the response from developers to be largely the same.

"People are going to continue to build on the hillsides," says Paffrath. "They will write this fire off as a fluke event that will never happen again." And when they do, he says, "Expect people to go two-story on lots that have only ever been one-story. Without a doubt, you will see Ventura County go from a median home of around 17 hundred square feet to something closer to 25 to 28 hundred square feet as a result of this fire."

Unlike Bel-Air, which has little to no middle class to drive out, the fires will likely forever change the economic diversity of Ventura County.   

"There is a whole group of people right now that are simply saying 'I'm done— call me when the check is in the mail,'" explains Paffrath. "They are leaving the area and even the state and are buying elsewhere. This is especially true for the elderly."

Sadly, Los Angeles has a long history with upsizing in the wake of catastrophe, typically at the expense of those on fixed incomes. 

As detailed in Ecology of Fear, Mike Davis' exhaustive chronicling of Los Angeles' natural and manmade disasters, the massive Malibu fire of 1956 — followed by smaller conflagrations in '58 and '59 — caused the once bohemian beach enclave to transform into the playground of the super-rich that it is today. Overwhelmed by the cost of rebuilding and put off by the loosening of fire restriction regulations, artistic types and others in the middle class fled in droves in the early '60's, leaving the city to what Davis labels "wealthy pyrophiles encouraged by artificially cheap fire insurance, socialized disaster relief, and an expansive public commitment to 'Defend Malibu.'"  

According to Davis, the overheated development that follows fire and other catastrophes tends to make already fire prone areas even more susceptible to wildfires, creating a vicious cycle. In Bel-Air, residents are worried about the strain that the newer hillside mega structures are putting on outdated infrastructure like water pipes. Some neighbors even report spotting private fire hydrants on properties of which, in at least one case, the city was unaware.

Which begs the question as to why would one want to invest so much in properties on overburdened hillsides that are still recovering from one of the worst droughts in recent California history?  

"While the rebuilds will only get bigger and bigger, at some point people are going to have to think about whether they should be living in these areas at all, regardless of size," says Rodeo Realty's Margolis.

While that is a question to be faced— or more likely, ignored— at some point in the future, in the short term look for the fires to only further inflate the Southland's skyrocketing rental market. (Average rent in and around Ventura currently sits at $2,035, while a typical two bedroom apartment in LA will set you back $1,740).

"People are clamoring for rentals right now," says Paffrath. "I have clients calling me up wanting to invest in rental properties in hopes of taking advantage of higher rents. No one wants to price gouge, but when you are facing a shortage, and we are, prices just naturally go up."

Adds Paffrath, "This is just how the market works."