“You’d think it was the apocalypse:” Fires ravaging L.A. have luxe homeowners on edge

It’s still too early to gauge property and casualty insurance market effects

TRD LOS ANGELES /
Oct.October 28, 2019 01:30 PM
Robert Balzebre and his home in the Hollywood Hills

Working from New Orleans on Friday, Robert Balzebre had been anxiously scanning his phone for alerts on wildfires erupting in the bedroom communities situated northwest of Los Angeles – 30 miles from his Hollywood Hills mansion.

Then, on Monday morning, a several-hundred-acre brush fire ignited on L.A.’s Westside near the Getty Center along Interstate 405, prompting authorities to issue mandatory evacuation orders for about 10,000 homes.

Balzebre, a commercial real estate developer who lives in Miami, owns a three-story, getaway vacation home tucked into tony Hollywood Hills, roughly five or so miles to the east. He outfitted the multimillion-dollar property with at least $100,000 in improvements to make it fire-resistant: The few eaves on the home are constructed with Ipe, also called Brazilian walnut, which is a heavily-oiled and dense wood not easily consumed by fire, said Abeer Sweis, a designer with Santa Monica-based SweisFloss who helped with the home’s design. The home also has exits on each floor, steel-made staircases on the outside, and plaster-based walls fused together with few seams on the exterior walls of the house – a design feature meant to lower the catching of burning embers, Sweis explained.

But Balzebre knows that despite all these precautions, “everything can burn.”

“I’m concerned, as anybody would be,” he said. “This is crazy stuff.”

“Between the hurricanes that I’ve dodged and the fires in L.A., you’d think it was the apocalypse,” he added. “It’s one danger after the other.”

The threat of fires in the Palisades, and last year’s conflagration in nearby Malibu, have hurt the luxury real estate market, spooking buyers and increasing the cost of home insurance.

“I don’t want to jump to any conclusion and be alarmist,” said Compass’ Fran Flanagan, who is an active broker in the Palisades neighborhood, which is among the areas evacuated in the wake of the Getty fire. She estimates that at least eight homes have burned thus far, ranging in value from $3 million to one under construction that could be worth as much as $25 million.

“Let’s just watch and see what happens,” Flanagan added. “I don’t know the extent of the implications of this.”

The costs to pay out claims following a massive wildfire can be catastrophic. Last year, California regulators moved to take over Merced Property and Casualty when it was pushed into insolvency after the Paradise, Calif., fire destroyed more than 13,000 homes. Over the last two years, California wildfires have cost insurers more than $24 billion, according to the Wall Street Journal.

Brad Roeber, executive director of the Glendale-based California Insurance Guarantee Association, created by the state legislature in 1969, is hopeful that other insurers don’t become insolvent due to the latest wildfires.

“I believe, certainly in the last two decades, the Merced company was the first one to ever be taken over due to wildfires,” he said.

Sweis, the designer, doesn’t expect to hear much from clients about upgrading to more fire-resistant materials until after the wildfires are extinguished.

“They are very scared right now,” she said. “Moments like these everyone is just trying to evacuate and get to safety. I’m just checking in with all my clients making sure they are okay and if they need any support.”


Related Articles

arrow_forward_ios
Placeholder image

Placeholder image

Placeholder image

Placeholder image

Placeholder image

Placeholder image

Placeholder image

Placeholder image

arrow_forward_ios