PACIFIC PALISADES – Residents affected by the recent wildfires in the Los Angeles area are already receiving offers to sell their valuable properties back, prompting Governor Gavin Newsom to take action against land speculators.

In an executive order issued on Tuesday, Newsom has placed a temporary ban on “unsolicited undervalued offers” for properties within 15 specific ZIP codes that were impacted by the fires, including Altadena and Pacific Palisades, sites of the Eaton and Palisades fires, respectively.

The Governor expressed his concerns about “predatory” developers who might attempt to capitalize on the distress of residents facing the loss of their homes. Historically, buyers in post-disaster regions have argued that they offer essential financial help to those who have lost lives and belongings, especially while dealing with insurance claims, if they have coverage.

“As families grieve, the last thing they should face is exploitative buyers taking advantage of their situation,” Newsom stated. “I have personally heard from community members and victims who received unsolicited and exploitative offers while their homes were still ablaze. We will not permit greedy developers to take advantage of these working-class neighborhoods during their time of need.”

Beverley Auerbach, a resident of Pacific Palisades, shared that an individual attempted to purchase the land where her home used to be, asking her to set a price without even seeing it. She rejected the offer, stating that she and her husband are fully insured and intend to rebuild.

The Auerbachs purchased their home in 1980 and have made various renovations since then.

Prior to the fire, real estate company Zillow had estimated that their three-bedroom, 1,676 square-foot house was valued at approximately $3.1 million, while a slightly smaller vacant lot that was on the market pre-fire was listed for $3.2 million.

“Here, the land is what truly holds value,” Auerbach said, referring to her area overlooking Santa Monica Bay. Around 30 of her neighbors also suffered losses in the Alphabets neighborhood due to the Palisades Fire.

Auerbach anticipates a lengthy legal process before rebuilding can begin, but she looks forward to reconnecting with her neighbors once again.

“We are committed to rebuilding. Almost everyone else feels the same way,” she mentioned. “It’s going to be a challenging journey, but we’ll get through it.”

The original development of Pacific Palisades was initiated by the Methodist Church as an affordable retirement community for church workers, conveniently located near Los Angeles but at lower prices than Malibu or Santa Monica. Once home to tradespeople like carpenters and electricians, property values have dramatically increased over the years, especially as homes have been expanded and updated.

In Altadena, long-term residents fear they may be pushed out due to rising prices during the recovery and reconstruction phase.

Concerns about opportunistic speculators taking advantage of disasters are prevalent, though empirical evidence on the issue remains mixed.

An August 2024 review by the Texas Real Estate Research Center at Texas A&M found “no systematic increase in investor purchases” following recent flooding in the state.

Conversely, a 2023 study examining hurricane-affected regions in Florida from 2000-2016 revealed that wealthier individuals moved back into neighborhoods after damage was repaired.

“By analyzing mortgage application data, we discovered that newcomers during this period had higher incomes, leading to a shift toward wealthier populations,” the study from the Journal of Environmental Economics and Management concluded. “Our findings suggest that market responses to natural disasters can result in enduring demographic shifts in affected areas, even if physical reconstruction is completed.”

Contributing: Dinah Voyles Pulver.