The Los Angeles-area wildfires have already destroyed as many as 24,000 homes and will likely cause a significant supply shortage over the next few years, according to First American Financial Corporation.

Some 1.1% to 1.6% of the city’s housing stock of 1.5 million units has likely been destroyed, said Xander Snyder, senior commercial real estate economist at First American in a report.

The Palisades, Eaton and other smaller fires throughout the Los Angeles area have destroyed between 17,000 and 24,000 housing units, he said.

The housing stock is composed of about 905,000 apartments in multifamily properties and 660,000 single-family units, according to First American estimates.  

“It’s too early to fully assess the scale of the damage, as the emergency is not yet over,” Snyder writes. “But it is clear that one result is a housing ‘supply shock.’”

Snyder said the wildfires have destroyed roughly the same number of homes that were built in 2022 and 2023 in the LA area.

“Based on this analysis, Los Angeles has lost approximately two years’ worth of new housing supply,” he wrote.

But rebuilding in damaged areas “will be challenging,” he said. “The city is known for its difficult building environment.”

Displaced residents will face long wait times due to the high costs of construction and extensive redevelopment times required. He noted that roughly 72% of residential land is zoned for single-family homes.

That “could make it difficult to quickly build housing stock densely enough to accommodate demand,” he wrote.