WSJ What’s News - After the Fires, L.A. Homeowners Face Housing Crunch

Episode Date: January 16, 2025

 A.M. Edition for Jan. 16. As Los Angeles residents survey the destruction from the wildfires, the WSJ’s Rebecca Picciotto says many wonder if rebuilding is an option. Plus, Israel and Hamas quarrel over the details of the Gaza cease-fire, while medical teams prepare to help hostages who have spent more than a year in captivity. And Jeff Bezos’ space ambitions take flight as Blue Origin’s new rocket blasts off. Kate Bullivant hosts. Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Relief about a deal to free Gaza hostages mixes with concern about their condition. Plus Jeff Bezos takes a step towards catching up in the space race with Elon Musk. And as Angelino's survey the destruction from the wildfires, many are contemplating whether they can afford to rebuild their homes. There's certainly a risk here and at the pockets of middle-class families that existed within these ultra wealthy neighborhoods. They might have been the last to do so, especially if lots of them decide to move out. It's Thursday, January 16th. I'm Kate Bulevant for The Wall Street Journal filling in for Luke Vargas. And here is the AM edition of What's News, the top headlines and business stories moving your world today.

We begin in Gaza, where Palestinians have been celebrating after a ceasefire deal that had eluded negotiators for months was finally agreed yesterday. The deal also brings relief to many Israelis, as it paves the way for the release of dozens of hostages held in the strip. Journal reporter Anat Pellet has been following the preparations to receive them, and she joins me now. Anat, last time we had a ceasefire to release hostages, it was back in November 2023. What can we expect this time around? So in the first stage of the deal, which is going to last 42 days, we're going to see 33 hostages, which are considered under the humanitarian category, kind of a more vulnerable

category. And this includes basically women, children, men who are over 50, and then dead bodies. And then we move forward to the second stage of the deal. Other remaining hostages are supposed to be released. And how is Israel preparing for when the hostages start getting released? What are they anticipating? So in Israel, they've been preparing for over a year. So hospitals have been conducting simulations

to receive the hostages. They've been preparing medical teams to be familiar with the files of all the hostages that are left. We have 98 hostages who remain in captivity, over 30 dead bodies included in that number. And there's a lot of concern about the state these hostages are going to be in, because back in November 2023, the hostages had come out after around 50 days. And, you know, that's a long time, but now we're talking about over 465 days. So that's a totally different game. We're talking about people who are mostly

being held in tunnels when back then they were also held above ground. And they're just more vulnerable as we assume that we're going to see more weight loss, we're going to see more serious mental states. So doctors say that despite the simulations they've done to prepare for the hostages, there are also going to be a lot of uncertainty about what they will see and they will have to learn every day. So if hostages on the first day come back with certain conditions, they'll know what to expect for the next batch of hostages. That was WSJ reporter, Anat Paled. Anat, thanks so much for your time.

Thanks for having me. And in the latest on the diplomatic side, mediators are working to ensure the Gaza ceasefire goes into effect on schedule this weekend, as Israeli and Hamas officials bicker over the final details of the deal. Meanwhile, Palestinian media and Gazans said Israel launched more airstrikes in the strip yesterday and this morning. The Israeli military didn't immediately respond to requests for comment. In a farewell address from the Oval Office last night, President Joe Biden warned that an oligarchy and what he called a tech industrial complex, are taking hold in America. I want to warn the country of some things

that give me great concern. This is a dangerous concentration, and that's a dangerous concentration of power in the hands of a very few ultra wealthy people. The dangerous consequences, if their abuse of power is left unchecked. Today, an oligarchy is taking shape in America of extreme wealth, power and influence

that literally threatens our entire democracy, our basic rights and freedoms, and a fair shot for everyone to get ahead. Ahead of Donald Trump's return to the White House, Biden offered veiled criticism of the president-elect, calling for the constitution to be amended so that, quote, no president is immune from crimes that he or she commits while in office. He also warned about misinformation and the impact of social media companies like Metta

cutting back on fact-checking. The truth is smothered by lies told for power and for profit. We must hold the social platform accountable to protect our children, our families and our very democracy from the abuse of power. Closing out a 50-year political career, Biden highlighted his work on guiding the country through the Covid pandemic, lowering drug prices and investing in infrastructure and technology during his presidency. Blue Origin has launched its massive new rocket for the first time, a major milestone for Jeff Bezos, who wants to catch up to rival space entrepreneur Elon Musk. The new Glenn rocket blasted off from a launch pad early this morning. It's designed to conduct regular flights using reusable boosters,

lofting commercial and national security satellites into orbit. Eventually it's meant to launch astronaut crews. The rocket was meant to be ready years ago and its launch has been postponed several times. Commentators on the company's live stream said the rocket's upper stage, which carried test systems for a Blue Origin spacecraft, made it to orbit, though the rocket booster wasn't able to land on a remotely controlled ship in the Atlantic Ocean. Representatives from the company and Federal Aviation Administration, which licensed the

flight, didn't immediately respond to a request for comment about the loss booster. And in Markets News today, Nate Anderson, the founder of Hindenburg Research, is shutting down his firm, citing the toll the work took on his wellbeing. The short seller was behind many of the highest profile bets against stocks over the past few years, wiping billions of dollars off the market values of companies including Nikola and Icon Enterprises. And on deck today, Bank Earnings Part 2, with Bank of America and Morgan Stanley due to report results this morning, along with a number of

smaller lenders and in Washington Scott Bessent president-elect Trump's pick to run the Treasury Department could offer clues on the incoming administration's economic priorities during his confirmation hearing. Coming up for those who lost their homes in the Los Angeles fires, what does the way forward look like? We've got that story after the break. Firefighters made progress yesterday against the massive wildfires burning around Los Angeles. Improved weather conditions should help crews make even more headway in the coming days, allowing residents to return to their neighborhoods to survey the damage and start

to think about rebuilding. Journal real estate reporter Rebecca Pichotto spoke to some of those homeowners and joined our Daniel Bach to talk about the long road to rebuilding they now face, as well as how the fires are impacting the housing market. Before these fires broke out, Los Angeles already had sort of the least affordable for sale housing market in the country. If you were making the median income, you would have had to spend 78% of those earnings on paying for housing every month. Not to mention, as of December 2024, more than 95% of Los Angeles apartments were occupied. So we're dealing with pretty short supply of housing.

And as a result, how we're seeing this play out on the ground in the short term, our rental bidding wars breaking out, spoke to one realtor in Los Angeles who saw a rental going for $25,000 a month and almost immediately offers were going for $40,000 a month and almost immediately offers were going for $40,000 a month. So California has laws against increasing rents above 10% in states of emergency, but the law doesn't really address exorbitant bids. So this might be one way for some of these rentals to reach prices that they wouldn't have pre-wildfires.

Okay. And as for the longer term, obviously we saw thousands of structures burn, so people will be thinking about rebuilding, but in your reporting, you say that process can be quite long and complicated. Yeah, you know, there are pretty extensive environmental review processes and zoning laws and permitting processes that make it time-consuming and costly for developers to get their projects done. And so in the wake of these fires, you're seeing lawmakers kind of acknowledge that

this is a moment where we want to build quickly. Over the weekend, Governor Gavin Newsom signed an executive order easing some of the state's costly environmental review processes. So expediting some of the mandates within the California Environmental Quality Act. On Monday, Los Angeles Mayor Karen Bass signed another executive order to speed up some of the approval processes. So now, permit review processes for project applications can only take a maximum of 30 days from when the project proposal was submitted.

Building inspections have to take place within two days of the request. So these are early stages of what people are expecting to be a broader loosening of some of the restrictions that have prevented development in the past. Another factor that could complicate rebuilding is money. We know the home insurance market in California was in crisis even before the wildfire. So I expect some people didn't have insurance and you report that others who did could end up discovering that their policy doesn't cover the full cost of rebuilding. What are some of the people that you spoke to thinking now? Yeah, the conversation around what people will get from their insurers is still happening. People are still waiting for insurers to kind of assess their homes. I spoke with middle-class homeowners who

sort of bought their house decades ago when it was affordable on a middle-class salary. So it's like nurses, clergy people, plumbers, and now they're sort of doing a calculus in their heads as they file their insurance claims and wait to see how much of their loss they'll recoup, lots of the value of their home was in their land. So if they were to sell that land plus the sum of their insurance compensation, that might go very far in another housing market, farther than it might in LA. So these are some of the questions that especially middle-class homeowners are thinking about right now. Yeah and one of the hardest hit areas was Altadena.

And reading your reporting, I couldn't help thinking about the makeup of that community and the social fabric of a distinct neighborhood. Can you talk to us about what the impact could be there? Altadena is a historically black neighborhood. It has this rich history. Some pockets of it were exempt from redlining laws. And so some of these areas acted as sort of a refuge for black families decades ago. And as a result, there've been these sort of communities that have proliferated there. There's certainly a risk here and at the pockets of

middle-class families that existed within these ultra wealthy neighborhoods. They might have been the last to do so, especially if lots of them decide to move out. Rebecca Pichotto is a real estate reporter with the Journal. Rebecca thanks for your time. Thanks for having me. And that's it for What's News for this Thursday morning. Today's show was produced by Daniel Bach with supervising producer Christina Rorca and I'm Kate Bulevant for the Wall Street Journal filling in for Luke Vargas.

We'll be back tonight with a new show. Until then, thanks for listening.