In Malibu, the fire is over — but the math has just begun

The Palisades Fire didn’t just destroy Malibu homes. It is quietly changing who will own Malibu for generations to come.

Drive Pacific Coast Highway today and the devastation remains impossible to miss. Charred foundations. Empty lots. Construction sites surrounded by reminders of what was lost.

Most people assume the problem is government moving too slowly. That’s only part of the story. The real story is arithmetic.

The California Post’s reporting makes that clear. One homeowner faces a $7 million rebuilding bill. Others have concluded rebuilding isn’t financially possible. They aren’t walking away because they stopped loving Malibu. They’re walking away because the numbers no longer work.

Government has plenty to answer for.

Every unnecessary permit. Every avoidable delay. Every bureaucratic hurdle imposed on wildfire victims should be eliminated. People who have already watched their homes burn shouldn’t spend years fighting agencies before they can rebuild or move on with their lives.

The slowdown matters because delay is not merely inconvenient. It is expensive. Homeowners keep paying taxes, carrying vacant lots, hiring specialists and making living arrangements while construction prices move against them.

Every delay also adds uncertainty. No homeowner knows whether the final price tag will be another $500,000 or another $2 million. For many, that’s reason enough to sell. Along the beach, rebuilding may require structural, civil, septic and geotechnical engineers, plus decisions about seawalls, utilities and access from Pacific Coast Highway.

The Post found only 61 homes being rebuilt out of more than 1,000 permits involving damage, repairs, debris removal and structures. Every month gives another exhausted owner a reason to sell the lot and leave.

Government can speed permits. Government can coordinate agencies. Government can waive regulations. Government can streamline approvals.

For years, California’s private insurance market has retreated from wildfire-prone communities. For many homeowners, coverage became harder to find, dramatically more expensive or both. Some found themselves pushed onto the California FAIR Plan because private insurers offered few options.

Others looked at the cost of full replacement coverage and concluded they simply couldn’t afford it. Still others underestimated what it would cost to rebuild under today’s construction prices and building standards. Either way, many learned after the fire they weren’t just underinsured. They were underinsured by millions.

Insurance that appeared sufficient suddenly fell millions of dollars short of what it actually costs to rebuild in Malibu today. That gap runs across the entire city, wherever property values and rebuilding costs are high and sharpest for the tony beachfront and ocean-view homes. Rebuilding costs bear little resemblance to what many homeowners insured a few years ago. Add today’s building codes, engineering reports, seawalls, septic and utility requirements, and the numbers become overwhelming.

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Even if every permit were approved tomorrow morning, many homeowners would still face the same impossible equation.

Find another several million dollars.

Or sell.

Government cannot manufacture millions of dollars of missing equity. Neither can insurance companies that have already paid the limits of the policies homeowners purchased.

Nor is there any realistic prospect of a Washington rescue. Whatever disaster assistance Congress provides, taxpayers are not going to write multimillion-dollar checks to bridge the gap between insurance proceeds and the cost of rebuilding in Malibu.

Selling, then, isn’t surrender. For many homeowners, it’s the only financially rational decision.

Critics often dismiss Malibu as a playground for billionaires. Plenty of extraordinary wealth exists there. But many of the homes destroyed belonged to families who bought decades ago, long before coastal property reached today’s extraordinary values. Some inherited homes that had been in their families for generations.

They may be wealthy on paper. But many were house-rich and cash-poor. Owning an $8 million property doesn’t mean having another $4 million available to rebuild it.

Every month of delay increases the financial pressure. Every additional engineering requirement raises the cost. Every dollar uncovered by insurance narrows the list of people who can realistically return. Eventually, the math wins.

That’s why this story is about far more than permits. It’s about ownership.

The homes that return will stand on the same lots overlooking the same Pacific Ocean. But many will belong to different families than the ones who watched them burn.

No one designed this outcome. It is simply what happens when a natural disaster collides with an underinsured community, exploding rebuilding costs and a regulatory system that adds delay to every step.

Malibu will recover.

Beautiful homes will once again line this iconic golden stretch of coastline on Pacific Coast Highway. Restaurants will reopen. The Malibu beach will remain one of California’s great treasures.

But if you follow the math, the outcome is inevitable: Many of the people who write the city’s next chapter will share two defining characteristics.

They will be wealthy.

And they will be new to town.

That won’t be because they loved Malibu more. It will be because they could afford what came next.

Jon Fleischman, a longtime strategist in California politics, writes at SoDoesItMatter.com.