This piece was originally published on Forbes on January 7, 2026.
It’s been one year since the devastating wildfires in Los Angeles destroyed homes in the Pacific Palisades and Altadena. And while residents are still figuring out whether and how to rebuild, speculators have wasted no time buying up distressed properties and vacant land. According to Redfin data, investors purchased roughly 40% of the vacant lots sold in fire-ravaged neighborhoods like Pacific Palisades, Altadena and Malibu during the third quarter of 2025.
These investors are buying low so that one day, when these neighborhoods are fully recovered, they may sell high. In the best of cases, these investors will quickly develop vacant lots into housing that is denser and more climate resilient, so that more residents may own homes that are both safe and affordable. But in the worst of cases, some investors never sell, opting to hoard the land as a store of wealth so they can benefit from rising land values in perpetuity, while contributing to the housing shortage that keeps homeownership unaffordable. This type of disaster capitalism has happened before, like during the aftermath of Hurricane Katrina and the Maui Wildfires, and as natural disasters become more frequent due to climate change, more neighborhoods will become investor owned.
Disasters Exacerbate Housing Inequality
Disasters do not affect all homeowners equally. In the Pacific Palisades, many homeowners are multi-millionaires and have the resources to rebuild or move on. Wealthy residents can purchase a second home while they wait to decide whether to rebuild and live their lives comfortably. They don’t have to sell to investors because they have the capital to hold their land, treat it as an asset and sell only when the market favors them.
However, Altadena is more of a working class neighborhood, and that means many residents can’t afford to keep their damaged homes. They can’t afford to wait for their insurance to make them whole. They need money now to live, so they have no choice but to sell. According to Redfin, the supply of lots for sale in Altadena skyrocketed to 225 in the past three months, up from just two a year prior. Some of these home sellers are renting homes nearby, while others have left Los Angeles for places with more affordable and more insurable homes for sale.
Regular Homebuyers Can’t Afford Home Insurance
Buying a home in a fire-ravaged neighborhood isn’t an option for the typical, middle-class homebuyer because even when they can afford the monthly mortgage payment, the insurance is often cost prohibitive. That’s because insurance premiums are spiking, and in some cases, coverage is unavailable altogether. Traditional homebuyers are locked out because they cannot secure the insurance mandated by lenders. Investors, however, often operate with cash or commercial financing that allows them to self-insure or absorb higher premiums. They can snap up a lot from a distressed owner, sit on the vacant land, and wait for the market to stabilize or for infrastructure to be repaired.
This shifts the benefits of homeownership from residents to investors. The people who lived there cannot afford to stay, and the people who want to move in can’t afford the insurance.
The Solution: Tax Reform That Puts Community First
Natural disasters that destroy homes don’t necessarily have to destroy communities too. We can promote neighborhood resilience with policy interventions that discourage speculation and fund community stability.
In California, Proposition 13 was designed to shield long-time residents from tax spikes. However, in the context of climate recovery, this well-intentioned law creates a perverse incentive. Because Prop 13 locks a property’s tax assessment to its purchase price (plus a capped 2% annual increase), investors are rewarded for swooping in to buy fire-damaged lots at their lowest point of value.
By purchasing a lot at a distressed price immediately after a fire, an investor locks in a rock-bottom tax bill for decades. This keeps the carrying cost of the land artificially low, encouraging speculators to sit on vacant lots while waiting for the neighborhood to recover and prices to soar. This behavior creates blight, restricts housing supply, and drives up costs for everyone else. We need to shift the incentives to favor developers, who actually aim to rebuild housing. Therefore, California should reform Prop 13 so that these tax protections do not apply to vacant lots in disaster zones. Taxing this land at its current market value would make hoarding prohibitively expensive, pushing investors to either build homes quickly or sell to developers who will.
We should also fund efforts that help local residents retain ownership of their communities. In Altadena, displaced residents have banded together to start a community land trust. This model works by purchasing land and holding it in trust for the community. The land is developed with the best interests of the community in mind, and when developed homes are sold, the land beneath the home remains the property of the trust, so that it will always be owned by the community.
By effectively removing the land from the speculative market, community land trusts ensure that homes are built and remain affordable for local families. The Altadena community land trust is an emergent effort in urgent need of funding. California and other states grappling with the social fallout of natural disasters must make funding these trusts a priority.
This two-pronged approach encourages the kind of development that helps communities come back stronger: it raises the cost of hoarding land for profit, while simultaneously funding the groups dedicated to affordable housing. By reclaiming the value of our land for the public good, we can ensure that when the smoke clears, the community is still there to rebuild.
