Home prices will be HUGE with surge in fire insurance costs, luxury realtor says

Luxury realtor Josh Altman joins us now. Josh, you sell a lot of homes in L.A., obviously. When we see fires like this, what happens to the real estate market after the fires? Yeah, Stuart, I wish I was here celebrating a big sale or something like that. But unfortunately, we're here talking about a thousand new renters and buyers that have now, unfortunately, entered into the L.A. real estate market. My phone over the past 48 hours has been ringing nonstop with different types of calls. First, you have the call for immediate occupancy in a turnkey property where somebody can put their family and then figure out where they're going to go. And then you have the next call for the long term leases for the two years, maybe even three years, because that's how long it's going to take to build these houses. And then you have the other call, which is the people who are not going to go back to places like the Palisades. It's going to take too long. You have neighborhoods that are going to be built. Are they going to want to finish their house and then sit there amongst construction for the next few years with their children in the house? It's not going to happen. So they're actually going to end up selling the dirt and actually looking to buy houses now. So to give you some sort of color of what's going on, we typically at the Altman Brothers, we list about one hundred fifty million dollars worth of real estate a month. In the past 48 hours, we are listing one hundred fifty million dollars worth of real estate. That's how much action we're seeing in the L.A. market. Now, on the other side of the coin, you have, of course, the landlords, right? They're going to put their houses on the market even if they didn't want to. And they're going to charge a premium, which is an unfortunate thing, because they think that the insurance companies are going to be paying for this. And then, of course, you have people that are putting houses on their market for sale in places like Brentwood, Santa Monica, Bel Air, Beverly Hills, because it's close enough to where their regular life used to be. So that's where they're looking to purchase houses. It seems to me you can't rebuild, certainly can't rebuild quickly until you fix all these green rules and regulations. Is there going to be a change in those regulations, a change quickly? This is California. Nothing happens quickly, unfortunately. The average build time for a house is about three years. That's about a year in the permit process. You have to hope that if people lost their house to a fire, they're going to go to the front line. I don't know if that's been approved or not, so they can actually break ground immediately. But we're realistically talking about a three-year process just to do that. We're not in the hillside, the hillside buildings. Forget it. That's a whole different animal. That could be four years, five years. Malibu is notorious for taking the longest time to build. Developers just stay out of that area because it could be seven or eight years. The other problem with the insurance money is the cost to build. So even in a place like the Huntington Palisades, which the entire neighborhood, unfortunately, has been destroyed, these are 7,500-square-foot houses on average. They're going to average from about $8 million up to $25 million. You are not going to be able to recreate a house that you were living in because your build cost is going to be at least $1,000 a foot, if not more. I guess you've got an insurance nightmare looming. It's happened already. That's not going to help, is it? How's that going to be resolved? Well, so we have been dealing, so we're all clear, we've been dealing with an insurance, fire insurance nightmare for well over the past couple of years. When I tell you the amount of deals that have not gone through because somebody falls in love with the house and then they realize that their fire insurance is twice as much as their monthly mortgage. I can't tell you how many deals have been killed in the past. Now, I mean, is it even going to be obtainable? I don't know. I don't see that happening. And that's a whole other problem that we have to deal with. Anywhere where you go, up in Bel Air, up in Brentwood, up in Beverly Hills, up in Malibu, very high up towards Mulholland, towards the mountains, you're going to have to bake into the price, and it is going to be reflective on the sales price of how much it's going to cost for your fire insurance. And it is going to be huge. It is indeed. Josh Oldman, thank you very much for being with us.