WMWD

Ponder this picture:

It's a screenshot of Zillow's estimates for a swathe of homes in the Pacific Palisades, a region in Los Angeles County that has been on fire for days. The estimates are, obviously, pre-fire.

Now, check this particular parcel.

Yes, that's a 1200 square foot single-story, picked sort of at random from the Zillow swathe in the first picture. Three bedrooms, one bath, built in 1947 on a 0.17 acre lot. The sort of house that you could buy for one-tenth the $2.83 estimated valuation in most other parts of the country.

This affirms the old adage about real estate: Location, location, location.

Modern residential construction can range from $100 to $400 per square foot, depending on location (cost of materials and labor), level of luxury, and the variations in local zoning and building codes. Given the location, and no matter that this appears to be a 1940s working-class cottage, we might guess that a rebuild would cost $250K.

Were the fire an isolated event, as in only one house burned down, the homeowner could be made whole for just a fraction of the market value of the property.

But, with the entire community wiped out, a good chunk of that $2.83M market value is also gone. Up in smoke, to offer the sad and obvious cliche. In time, the "location" elements that drew so many to pay so much for homes in that area (I picked one of the cheapest locations I saw, and as you see there are many valued at two to four times as much) will likely prevail, but that might take a decade or more.

I've witnessed the phenomenon of long-time residents of a neighborhood that grew affluent over time reaping windfall profits by selling the homes they grew up in. I've also seen the same category of folks pushed out of their childhood homes by escalating property taxes they could no longer afford to pay. In both instances, such folks used the stores of wealth that those homes were to finance their future lives and retirements.

What happens to people of similar circumstances that lost their homes in the fires?

Technically millionaires before the fire, some are apt to be middle-class people who had the large majority of their personal wealth in that single asset. With that asset massively devalued, thanks to the now-laid-bare incompetence LINK of the progressives who have been running the state for too long, their future plans are as gone as their homes.

It's a stark reminder that something is only worth what someone else is willing to pay for it. This lesson, as vital as it is, goes ignored or unheeded no matter how many times it is taught.

In its stead, we find a lot of head-in-the-sand wishful thinking... and a sheaf of self-serving economic theories such as Modern Monetary Theory and Marxism's Labor Theory of Value. Both are piles of garbage and sophistry, but both dominate progressive thinking.

That same wishful thinking and detachment from reality is at the heart of the modern green movement, where delusions such as "net-zero" and the belief that wind and solar can power the nation without impoverishing it continue to be treated as gospel.

You've heard the phrase "go woke, go broke" to the point of cliche. Modern progressivism has proven to be a Weapon of Mass Wealth Destruction. That the wealth being destroyed is most often someone else's is why it persists. After all, it's always about Other People's Money.

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A footnote. I expect many residents will sell their parcels rather than wait out reconstruction. I expect those sales will take place at a substantially lower price point than before the fire, even after removing the structure component of price. I expect there will be deep pocketed opportunists who will hoover up a lot of that land on the cheap, build anew, and make a profit. Many will deem these buyers vultures or scavengers or the equivalent of price gougers. Some will demand the government intervene. But, none of this can be “fixed” by government - even a government smarter than the current one. It’ll be unseemly and worse, but there are no utopias.