Mary Cummins, Real Estate Appraiser, Animal Advocates, Los Angeles, California

Mary Cummins, Real Estate Appraiser, Animal Advocates, Los Angeles, California
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Thursday, February 13, 2025

"Altadena is not for sale!" What's the Alternative? Foreclosure, Bank Sale, Homelessness, Monetary Losses? by Mary Cummins Real Estate Appraiser

altadena, gentrification, mary cummins, eaton fire, land value, insurance, los angeles, california, home, house, value, fires, destroyed, black, latino. Photo of Mary Cummins doing property inspection in front of home burned in 2025 Los Angeles fire.

"Altadena is not for sale!" is the rallying cry from some Altadena residents. Some don't want fire destroyed properties to be sold to developers to rebuild. They fear the neighborhood will change and become "gentrified." What is the alternative? Should properties stay vacant for years? Should homeowners lose their properties to foreclosure and lose all their investment? Some people clearly haven't really thought this through. I personally believe the people yelling this are probably renters and not homeowners. They also don't know the true history of Altadena.

Altadena has been changing for many years. It originally belonged to Native Americans. Spain stole their land through conquest starting around 1492. Mexico then owned the land after the Mexican Revolution in 1820. California later became part of the USA after the Mexican American War in 1848. The original Altadena pioneers were farmers. The area was later turned into home development starting around 1880. 

Some areas of Altadena and the rest of the US had "whites only" covenants. This meant no Blacks, Mexicans, Jews, Indians, Asians ... could buy or own the properties. Starting around 1940 Altadena started to decline as residents moved to newer nicer areas. Around this same time Courts started to uphold the Fourteenth Amendment making deed restrictions unconstitutional and unenforceable. Soon after antidiscrimination, anti-segregation and Fair Housing Acts followed and anyone could live in any community they could afford. This coincided with what was called "white flight" from some older less expensive areas. This is also called "reverse gentrification" which correlated with property decline and property value declines. All types of lower income people moved to this area because it was now more affordable.

Real estate all over the world goes through cycles from growth, stability, decline to revitalization and repeat. Some call the last stage "gentrification" which is now a dirty word in real estate. It's just a real estate cycle when properties in the area are improved and values increase. It has nothing to do with race or culture. From 1940 to 1990 Altadena was still in decline. As home prices increased in surrounding areas people were pushed out of for example more expensive Pasadena into less expensive Altadena. This caused the revitalization stage to begin. Over the last 20 or so years homes and the community have been improved and values have risen. The makeup of Altadena continued to change.

People who make less money have less money and buy and own less expensive homes in less expensive areas. Whites make more money than Blacks, Latinos. The reason is socioeconomic factors and not race. The makeup of Altadena began to change as property values rose. The current census shows the current population is 41% white, 16% black and 28% Latino. Years ago there were more blacks because area was less expensive. Many years ago it was all white. All areas change over time. And to the people spreading the fake conspiracy theory that the Eaton fire was arson to push black people out of Altadena, stop, just stop. Latinos and whites who are the majority also lost their homes.

Property values have been increasing. The median home is now $1.3M. If you bought the median home with average down payment, your mortgage would be $7,200/month. Property taxes would be about $1,400 and insurance $550 for a total of $9,100/month. You'd have to have a gross income of about $30,000 a month to be able to afford that home today. This is why the population has been becoming more white again over time. People buy what they can afford. Blacks and Latinos have been willingly selling their homes to white people for huge profits. The people who complain about home price increases are tenants and not homeowners.

If the median home was worth $1.3M and burned down, you are only left with the land. Land in the area was worth about 70% of the total value before the fire. We have a high land to total value ratio in Southern California. Before the fire that $1.3M home had a land value of $910K. After the fire the land is worth a lot less. The main reason is no bank will finance a loan right now on burned land. There is no fire insurance. That means you'll have to pay all cash. All cash transaction mean a discount of 20% or $728K land value. The land still has to have the debris removed, foundation dug up, top soil removed, toxicity tests on the soil... The utilities also need to be restored to the property and entire area. A lot of the supporting facilities have been destroyed not to mention damage to the streets, signs... This will take 18 months to two years minimum to repair. Time is money because of holding costs. The property will also have stigma for years to come which negatively affects property values.

At this point with clean up costs and all cash purchase only a developer would be able to buy the burned land. They expect a 20% return on investment after all costs and fees. Building homes is a job just like a police officer or teacher has a job that pays wages. This means the land is now worth $546,000. That's about what the recent burned lot in Altadena just sold for. The ex homeowner can sell their property, pay off their mortgage and either rent for a while or buy a new less expensive home, condo.

If the owner of a burned home has a mortgage, they still must pay the monthly mortgage and property tax even if the home burned down. Property tax is .0125% of assessed home value per year. People can have it reassessed after the fire if it burned down. If the homeowner had fire insurance, they could use that money to pay off the mortgage or build a new home. Most fire insurance policies don't give you enough money to build a new home. The depreciated value of the median home before the fire was maximum $350K. Median home size in Altadena was 1,721 sf. Insurance companies generally give you about $100 to $200/sf in Altadena for your home or $172,100 to $344,200. New homes cost more than that to build. I'd say it's about $250/sf today and up to $400sf if you're on a slope or want very good quality. That's $430K to $688K to build a new home. That could be more than double what insurance will give you. Unless you've got a ton of cash sitting around you can't afford to build a new home. You also have to pay for a place to live for two to three years in the meantime besides paying your old mortgage and property tax. No one can afford that. Most can't even afford that in the Palisades fire area.

This is why most homeowners of burned properties are in a very tough position. Unless you have a ton of cash you can't afford to rebuild your home. If you had no fire insurance, you're in an even worse position. I'm sure all of those without fire insurance didn't have it because they couldn't afford it. They at least didn't have mortgages. If you have a mortgage, you must have fire insurance to protect the lender. Generally the fire insurance money is used to pay off the mortgage to the lender. That's why lenders force people to have fire insurance, to cover the bank's investment.

This brings us back to "Altadena is not for sale!" Why the hell not? Do you expect the homeowners to have enough money to pay for their old mortgage, property tax, rent for two to three years and the cost to build a new home? Most in the area can't afford that. This is not a very affluent area based on income. Only developers can afford to buy the land today. The only alternative would be foreclosure by the bank. The bank would then sell it to a developer. Then the homeowner could lose everything. If the homeowner had no loan, the lot would just sit vacant bringing down property values in the neighborhood. The homeowner still has no home in which to live and must pay property tax.

I believe the only people yelling "Altadena is not for sale!" are renters or clueless idiots who don't give a shit about the homeowners. They probably only care that they no longer have a cheap place to live and must pay more or live elsewhere. Maybe some were just living for free with grandma who bought the home many years ago when it was far less expensive. Anyone who cares about the homeowners will tell them to do whatever they want with their own home to protect their investment and money. A lot of the people who lost their homes were older and have no desire to go through three years of construction and stress. Let the homeowners do what is best for them.

Mary Cummins of Cummins Real Estate is a certified residential licensed appraiser in Los Angeles, California. Mary Cummins is licensed by the California Bureau of Real Estate appraisers and has over 35 years of experience.


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