The Aftermath: What California and the U.S. Can Expect in the Coming Years as a Result of the 2025 L.A. Fires
Fallout from these hideously devastating fires will extend far beyond the LA city limits.
It is somewhat fashionable to be hostile to the culture and people of California in general and Los Angeles in particular. Whether it is the weird embrace of strange beliefs, too much focus on superficial qualities, or simple jealousy over what seems to be a laid-back, sun-drenched phony existence, much of the country has little if any empathy for whatever troubles are being faced by Southern Californians.
Well, it looks like the rest of the country is about to care a whole lot about SoCal. Here are a few ways these fires could impact every American, not just those who live among the ruins.
Tax Base Diminishment
As of this writing, at least 12,000 structures have been damaged or destroyed by the various fires burning through the Greater Los Angeles area. Those are homes and businesses that cannot be tapped for tax revenue anytime soon, possibly forever.
Losing a home or business is distressing enough, but when state and local governments send you a tax bill for property that doesn’t exist anymore, or you no longer draw a salary that went up in smoke with your workplace, distress can morph into anger and desperation.
It is before this backdrop that one can predict most of the affected people will leave Los Angeles – or California altogether – and start out fresh in a more responsible and affordable region of the country. In its wake, this out-migration of taxpaying citizens will not be replaced in its entirety, leaving an already broke city and state mitigating the loss of tax revenue by any means necessary (except, of course, even a slight reduction in overall spending). Whatever scheme is cooked up, sensible people can agree that the state cannot possibly tax its citizens further. Or can they?
What will likely take place is a federal bailout package for California with many strings attached, including requirements of fire prevention activities that the state has ignored for decades or has legislated against. This is the best-case scenario for Californians and Americans in general; holding public officials accountable for public safety as a condition for financial relief. It is long overdue and will show how much public safety negligence has been on display for generations in the Golden State.
The Insurance Rate Hike for Everyone
The 2025 Los Angeles fires, according to AccuWeather, have become the region’s worst fire disaster in history. Predicted damages once the fires have been fully suppressed and assessed losses are calculated are expected to be between $250 billion and $275 billion. The California wildfire destruction has surpassed the inflation adjusted damages of $200 billion from Hurricane Katrina in 2005.
Nearly a month into the fire disaster, the estimated insured losses are well over $20 billion, suggesting the majority of economic losses are uninsured. This might have been due to having at least five major insurance carriers (State Farm, Chubb, The Hartford, Tokio Marine, and Farmers) either reducing coverage, canceling existing policies, or stopping the writing of policies in California altogether.
Pacific Palisades is a neighborhood of concentrated wealth, with an average home in the 90272 ZIP code valued at $3,500,000. Over half of tax returns indicated gross household income at around $181,000, meaning that a huge chunk of city residents’ personal asset value is in their home. In similarly destroyed Altadena, the asset-value-to-income gap is even wider, with average home value of $1,200,000 yet more than 60 percent of working-class households reporting income of less than $100,000.
The affluent folks in Pacific Palisades can afford property insurance, while those in Altadena would find it difficult to afford. Those families living in paid-for, multi-generational homes, probably could not justify the extra expense. Those uninsured people losing their homes to fire will be left with nothing of value to their names.
Others with property insurance will collectively file claims that could reach $100 billion, impacting the underwriting capabilities of every insurance company affected. Expected rate hikes (or further cancelations) will obviously be issued in wildfire prone regions, however everyone will feel this burn as insurance companies will need to spread out the financial losses to policyholders in the Northwest, Midwest, Northeast, and Southeast.
When we purchase insurance, we are joining a risk pool. Even if we never file a claim, we are still expected to pay a higher rate if the pool is drawn upon by others to pay for losses. Insurance companies have been warning California for multiple decades of its refusal to observe common sense prevention and mitigation techniques that are well proven to reduce fire damage. The recent pullouts by insurance companies out of California should not come as a surprise; state and local officials were warned for years that their inaction would lead to this very scenario.
The State Seizes Your Neighborhood Lost to Fire
Cynicism isn’t enough of a reason to conclude that perhaps a disastrous fire (or other destructive event) can be motivation for a state like California to actually increase its oppression of the people residing within its borders. All you need to do is understand what happens when one-party rule is established and there is absolutely nothing that stands in the way of officials seizing property that they always believed you never owned in the first place.
The phrase for this is eminent domain, or the compulsory taking of private land for public use in exchange for “just compensation.” I put the phrase “just compensation” in scare quotes to illustrate the fact that under eminent domain, the state determines the value of your property, not the market.
What seems incomprehensible during a fire disaster becomes almost obvious in its aftermath. California, in particular, has egregious building permit laws that are expensive, glacier slow, and nearly impossible to follow. Some lawmakers are pledging to streamline the process or eliminate some steps altogether, but it will not happen because it would expose the permitting system as being what critics say it is: A means to discourage the development of businesses and single-family homes, not to manage its proper expansion.
These bureaucrats have something even more nefarious in mind: Using eminent domain laws, state and local officials can seize destroyed property in neighborhoods decimated by fire and, considering the diminished value of a destroyed property, compensate the owner at the lowest possible amount. Once the area is re-zoned, officials can then set out on their quest to build low-income, multi-family housing where desirable single-family-home neighborhoods previously existed.
This is the vision of the leaders of major California cities such as Los Angeles. Compact multi-level living units, housing a hundred people in the same space a family of five previously occupied, will be constructed similar to those in Hong Kong and Shanghai. Having no parking spaces – purposely planned, of course – residents will rely on public transportation, ride sharing services, or electric scooters and bikes.
Sure, there will be plenty of talk about “building back” and “restoring our neighborhood” to pre-fire conditions, but that simply won’t happen. The devastation is complete, and the land is too valuable to state officials that already have plans to “reimagine” the area as a testament to a “new way of living.” In other words, these burned-out legacy neighborhoods will not return but will instead be replaced with state-funded concrete-and-steel no-frills apartments housing tens of thousands of low-income people working to service the wealthier surrounding neighborhoods that escaped being destroyed.
The End of the Middle Class in SoCal
And there you have it. It is the perfect encapsulation of Southern California’s socio-economic makeup: The wealthy that can afford to live here, and the destitute that are dependent on the state. The middle-class families that have been burned out of their homes will leave California, many of them penniless, searching elsewhere for more hospitable opportunities to rebuild their lives.
Those of us who weren’t burned out are thankful to God. We could have been among those poking around the charred remnants of our beloved home, and we know it. We have seen unmistakable proof that if disaster strikes, nobody will be there to save us, regardless of the insane amount we pay for public safety here in California.
Why do we stay, you ask? Don’t think for a moment we don’t ask ourselves this question regularly. We’re probably one or two incidents away from leaving altogether, but we have faith that clearer minds will prevail and that common sense will make a comeback.
Even here in the land of fruits and nuts.