In the serene town of Altadena, Martin Johnson and his fiancé, Celeigh Chapman, had poured their hearts and souls into restoring and renovating their home by hand. It was a labor of love that spanned several years, with every detail meticulously attended to. From hand-sanding doors and window frames to spending 18 months perfecting the floors, they were on the brink of completing their masterpiece. Tragically, within hours, it was all lost to the ravaging wildfires that swept through the region last week.

The loss was not just financial but deeply emotional. Johnson, who co-owns LA Woodshop—a haven for woodworking enthusiasts and professionals—recalled the joy of cooking their first dinner in the house just after Christmas. Now, they find themselves navigating the harsh realities of a housing market in Southern California that was already fraught with challenges and has been further exacerbated by the wildfires.

Thousands of families have been displaced, and the scramble to find temporary and permanent housing has begun. The demand for housing has surged, while the supply has plummeted, creating a perfect storm that is likely to drive up prices for both buying and renting in the months and years to come. Real estate agents and economists are in agreement that the situation is dire and will have long-lasting effects on the region's housing landscape.

Los Angeles real estate agent Brita Kleingartner paints a bleak picture, stating, "We were already in a housing crisis. Even before this, we didn’t have nearly enough homes for sale. We didn’t have enough homes for lease." The wildfires have only intensified the problem, with an overwhelming demand that is just beginning to manifest. Agents are reporting an unprecedented surge in inquiries, with most showings now being for families who have lost everything.

The financial impact is already being felt. Some real estate agents are witnessing rental prices climb by hundreds, if not thousands, of dollars a month. Jeremiah Vancans, another Los Angeles real estate agent, reports that prices of some units have increased by 15% to 20% in the last week alone. "Demand is going to be through the roof," he says. "The inventory was already pretty low. I imagine it’s going to create more upward pressure on prices."

However, the long-term impact on prices is still uncertain as people try to assess the potential insurance payouts for their losses. "It’s too early to really tell how this is going to affect the LA market," Vancans admits. "People are still numb. The fires are still burning."

Real estate agents are working tirelessly, with 12-to-14-hour days becoming the norm due to the surge in demand. Jade Mills, a Beverly Hills real estate agent at Coldwell Banker, laments, "There are basically no rentals." She has been desperately trying to find available properties, even reaching out to sellers to see if they would be willing to rent.

Restoring the city’s lost housing stock is a monumental task that is expected to take at least three to five years. The process involves clearing burned homes, settling with insurance companies, navigating the permitting process, and finding the labor needed to rebuild. Vancans also expresses concern about the potential for "predatory buyers" who may take advantage of the financial misfortune of those who have lost their homes by making cash offers for their properties.

A study by Redfin of past wildfires shows that property prices can initially fall in the short term as fire-damaged homes or lots that need to be cleared of debris sell at a discount. However, this decline is not permanent. "Like much of the US, California is facing an acute housing shortage," says Daryl Fairweather, chief economist at Redfin. "The wildfires themselves are also making housing more expensive. After a town burns, builders come in and construct new homes, which are typically more expensive. And homeowners who stay frequently invest in making their homes more fireproof, which increases property value."

The market had already been very tight, with data from the California Association of Realtors showing fewer than 30,000 homes, townhouses, and condos sold last year in a county of 3.7 million households. Now, with an estimated 10,000 homes lost to the fires, the situation has become even more critical.

Real estate agent Brock Harris notes, "In the past five years it’s been bidding-war city. Any house that was under $2 million was getting 10-20 offers. Now with people shopping with insurance money, it’s going to get distorted significantly."

Johnson and Chapman are among those affected, staying in an outbuilding on a friend's property temporarily. Lori Levine Harris, a real estate agent who has been trying to help, has compiled a spreadsheet of furnished homes available for rent, but the supply is woefully inadequate. "Short-term furnished housing—that’s what people are going to need. My phone has been ringing off the hook," she says. "We already have limited housing supply, and losing 10,000 homes will exacerbate that situation."

Most of the furnished units on her list are in some of the more expensive parts of the market, such as Beverly Hills, Bel Air, Malibu, or Westwood, with staggering rents. The median price for the 75 properties available is about $16,000 a month, ranging from a relatively affordable $2,600 unit for a one-bed, one-bath apartment to $250,000 a month for a 22,000-square-foot furnished Beverly Hills mansion with eight bedrooms and 15 baths.

For those already renting apartments or homes, Los Angeles and most of the communities in the county have rent control that limits rent increases at the end of an existing lease. However, those looking to move into a vacant apartment because of the fires are likely to face significantly higher rents.

Joe Thompson, a resident of Pacific Palisades, is one of the fortunate ones whose home was not completely destroyed by the fire. However, the damage is extensive enough that it could take months before it’s safe to return. His family has been staying in a hotel and is now looking at rental units. He has seen prices skyrocket, with some listings increasing sharply from their previous asking prices. A friend of his, another fire victim, had to agree to pay 12 months of rent upfront to secure a lease.

Thompson says, "Financially, I think the insurance plan we have will be OK for helping with living expenses. It’s just the price-gouging and competing for rentals with everyone who is going through even worse right now is difficult. You’re trying to line up rentals, but you have no idea how long you’ll need it. And the only way to distinguish yourself (when trying to sign a lease) is to put up 12 months of rent upfront."

In conclusion, the wildfires have not only left a trail of destruction but have also ignited a housing crisis in Southern California. The loss of thousands of homes has created a surge in demand that the market is ill-equipped to handle. As families like Johnson and Chapman's search for new beginnings, they face an uphill battle against rising prices and limited options. The road to recovery will be long and fraught with challenges, but the resilience of the community and the support of organizations and individuals will be crucial in helping these families find stability and rebuild their lives. The housing market in Southern California will undoubtedly feel the effects of this disaster for years to come, and it will take a concerted effort to address the shortage and provide affordable housing options for all.