Monday Morning Quarterback
(Monday, January 27, 2025)
Tanker 47 rears up as helicopter pilot Darren Davies settles it to hover over the Encino Reservoir, a half-mile-wide artificial lake perched on the shoulder of a hill overlooking the San Fernando Valley. He holds steady a dozen feet over the water as the flight mechanic in back, John Trivellin, lowers a 23-foot-long retractable snorkel into the reservoir. “Tanker 47, we’re in the dip,” co-pilot Pablo Montero calls over the radio. It’s 9.30 p.m. on Saturday, January 11, and the crew is on its third straight night working the Palisades fire, a Godzilla of a blaze that has already scorched more than 20,000 acres, killed five people, and annihilated more than 5,000 homes and other structures. The fire is less than 15 percent contained. Davies’s infrared goggles turn the night into day, rendering the sprawling lights of the Valley below like a galaxy of stars. In front sits a yellow rubber duck, a sort of mascot, jiggling atop the control panel from the vibrations of two massive sets of triple-rotor blades whirling overhead, each weighing 360 pounds. Radio frequencies for different fires are scrawled in black Sharpie on the inside of the windscreen in front of Montero, who handles communications. The Chinook helicopter is a beast, a 99-foot-long, 25-ton machine originally designed for humping troops and weapons around the battlefield, now repurposed for a different kind of war. It’s more than twice as big as the Black Hawk (its most famous cousin), and twice as long as a semi-trailer when counting its 60-foot rotors. Inside Tanker 47’s cargo bay sits a 3,000-gallon tank, roughly equivalent to six hot tubs. While it’s not a vast amount in absolute terms, a helicopter can drop the water precisely, and all at once, which can halt the advance of even a large fire. Within seconds, Davies can feel the aircraft grow heavier as the snorkel drinks from the reservoir and he throttles up the twin 5,000-horsepower turbine engines to compensate. In less than two minutes, the helicopter has taken on ten tons of water. Montero flips a switch, and the snorkel tucks back up into the fuselage. Davies adds more power, and they climb, sluggish under the weight of their load. “Tanker 47 coming out of the dip,” Montero calls. Within minutes, Tanker 47 is off to the Palisades Fire to drop its liquid payload.?
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California Fights Wildfires Like Wars. Curb Magazine reports that walls of flames pushed by hurricane-force winds devoured our Los Angeles?basin two weeks ago, leveling whole neighborhoods and overwhelming fire-fighters. The water streaming from fire hydrants slows to a trickle. Ash rained down over the tens of thousands fleeing their homes, masked against the choking smoke. For Angelenos watching their city burn, there is no prior experience that can help them grasp the scale of what happened. As a friend texted me from Hollywood, “This may be the biggest wildfire disaster in world history.” And indeed it was! The scale of the destruction?is all the more dismaying given how assiduously California has prepared itself to combat wildfires. The state’s Department of Forestry and Fire Protection (better known as “CAL FIRE”) spends $4 billion a year?on prevention and mitigation. Over the last decade that money has allowed it to assemble an army-like force of unprecedented sophistication and scale, with a staff of 12,000 and an aerial firefighting fleet?larger than most countries’ air forces. Yet in the face of the worst fire conditions in over a decade, it wasn’t enough. Though some 9,000 firefighters were on hand to battle last week’s blazes, they were overwhelmed by the multiple wildfires that moved at hundreds of yards per minute. “We simply don’t have enough fire personnel in L.A. County between all the departments to handle this,” L.A. County fire chief Anthony Marrone told the L.A. Times?last Wednesday. The problem wasn’t only a shortage of manpower. Even the most formidable human efforts are useless when bone-dry undergrowth is whipped by the strongest winds our county has experienced in years, with gusts up to 100 mph. “When that wind is howling like that, nothing’s going to stop that fire,” says Wayne Coulson, CEO of the aerial firefighting company Coulson Aviation?that’s battling the fires. “You just need to get out of the way.” The winds slackened last Wednesday night and on Thursday morning, helping firefighters gain the upper hand against the infernos. The city’s fire chief announced last Thursday that the Woodley fire in the San Fernando Valley had been brought under control and that firefighters had extinguished the Sunset Fire?threatening Hollywood. But other fires still burned out of control and further danger loomed. According to the National Weather Service, humidity remains dangerously low and gusty winds of up to 70 mph are expected between Thursday night and Friday evening. By Thursday morning, five major fires were still burning and tens of thousands?of people were under evacuation orders. Warned the NWS: “Any new wildfires that develop will likely spread rapidly.” Fortunately, it rained this weekend (and today) so the worse may be over.?
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Will the L.A. Fires Sink Bass or Newsom? Gavin Newsom, Karen Bass, and the 2028 Summer Olympics: All three, to different degrees, have been imperiled by the?deadly wildfires?still tearing through Los Angeles. All natural disasters are, in some form, political tests, and they aren’t always fair. No government can save every life when a hurricane rages, floodwaters rise, or fires scorch thousands of parched acres in a matter of hours. As much as technocratic competence matters, there’s only so much it can accomplish. Los Angeles, so bereft of rainfall, was due to burn, and no executive, working their wonders, could have staved off such a disaster. The Santa Anas can’t be managed away. But let’s look at Bass and Newsom separately.
????1.???What Will Happen to Mayor Bass. Not all the criticism of Bass, the Democratic mayor of Los Angeles, has been fair. The actual story behind cuts to the local fire department under her leadership is rather complex, and it’s far from apparent a few extra million dollars would have mattered in a cataclysm that is doing tens of billions of dollars of damage to the city. The department’s funding woes also predate Bass, extending back to the aftermath of the 2008 economic crash. Elon Musk has baselessly?(and predictably) blamed the spread of the fires on a fealty to diversity initiatives; Donald Trump, on the attack, hasn’t helped matters either. But the reality for Bass is that her political career might be coming to an end. She broke a pledge?not to travel abroad as mayor, finding herself in Ghana on a specious political trip as the wildfires first erupted. She has struggled mightily to communicate to her city, freezing up at reporters’ questions and offering little in the way of inspiration?for residents desperate for a leader. Los Angeles operates under a weak-mayor system with great authority invested in the city council and the county board of supervisors, but this doesn’t diminish Bass’s symbolic role in a time of crisis. Bass is in danger because it’s straightforward to recall politicians in California and such an effort, as Bradley Tusk has pointed out, wouldn’t be difficult to fund. She is in the crosshairs of the wealthiest Angelenos, who suffered the brunt of the fire that ripped through Pacific Palisades. Her 2022 opponent, Rick Caruso, is a billionaire real-estate developer who could spend millions of his own money to drag Bass out of office. California voters, in a restive mood of late, already drove out the mayor of San Francisco and our progressive district attorney here in Los Angeles in general elections last year and recalled another progressive DA in San Francisco in 2022. It’s not hard to imagine that she’s next. It doesn’t help that Bass, who spent decades in Congress before ascending to the mayoralty, speaks like a risk-averse legislator. In a recall election, there wouldn’t be another candidate on the ballot; voters would simply have an up or down choice on Bass. Given her unpopularity and the amount of money that would be spent to oust her, survival seems improbable. She has to hope, above all else, that Caruso or someone else doesn’t decide to fund a near-term recall so she can try to recover her standing.
????2.???What Will Happen to Governor Newsom? Newsom, meanwhile, is a term-limited governor who wants to run for president. His case was always fraught: California has been besieged by various crises (both natural and man-made), during his two terms as governor, and the state exists in the average voter’s mind as the locus of the national homelessness surge. California liberals, after Kamala Harris’s popular vote loss, aren’t exactly in demand. There’s a slickness to Newsom (an unctuous quality) that can be alienating. But he is a genuine political talent and a fierce communicator. If you remember, he gleefully debated Ron DeSantis on Fox News when it looked like the Florida governor was the front-runner for the Republican nomination. He relishes combat in a way few top Democrats seem to, and he’s quite comfortable on television. Reliable Democratic voters who want their party to fight again (and their leaders to not shirk interviews) may find much to like in Newsom. The wildfires, though, could damage him. His many rivals for the 2028 nomination will be happy to question California’s wildfire-prevention efforts and water management. A Bass recall won’t help matters, especially if it’s successful while Newsom strains to save her. What Newsom will need to deliver on is a massive, state-financed rebuild that is both expansive and efficient. He will have to marshal his government for a reconstruction the likes of which have rarely ever been seen, all the while preparing for climate change — since Los Angeles likely hasn’t seen the last of deadly large-scale wildfires.
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Rebuilding After Fire. We all know that we are infuriatingly terrible at preventing the preventable. The calamitous fires that have swept out of the hills around Los Angeles, laying siege like an invading army in a pincer formation, spring from a mixture of natural phenomena and the human refusal to act on what we know. Wildfires are a special kind of disaster in that we are often the ones who light, feed, and propagate them. Flames pass from house to house, pausing for however long it takes to suck up all the fuel stored up inside, furiously converting furniture, bedding, drywall, photographs, appliances, and diaries into carbon, heat, and toxic plumes. The longer a fire lingers, the hotter it grows and the more time it has to slip next door and start the process all over again. There’s an upside to this human agency, though: As suppliers of fuel, we have some control, not over a fire that’s currently burning but potentially over the next ones. We can’t placate an earthquake or deflect a tornado, but we can refrain from turning a small brush fire into an all-consuming conflagration — especially in areas that have already burned and will soon be ready to rebuild but will inevitably catch fire again. “As long as we continue to build houses with wood in places that are expected to burn, the only outcome we can expect is that houses will burn,” says Michele Barbato, a professor of civil and environmental engineering at the University of California Davis. “We need to build noncombustible homes.” Barbato believes that builders in Southern California and other fire-prone places should return to an ancient construction material that is plentiful, ubiquitous, indestructible, harmless to harvest, and easy to use: DIRT. Earthen structures have a long and varied history: the hand-formed Great Mosque in Dejenne, Mali, adobe churches; adobe churches, vertical villages, and new high-end mansions,?in Mexico. They have a reputation for frailty and for melting in the rain, but Barbato and his students have honed a technique of compressing soil into?manageable blocks and hardening them with small amounts of cement. They have blasted the results with temperatures up to 1,800 degrees (as hot as a wildfire with 60-foot flames) for seven hours at a time. The blocks, which are cheaper, tougher, and more sustainable than clay-based bricks, or wood, remained impervious. They can be waterproofed with plaster, reinforced to withstand earthquakes and hurricanes, and manufactured on a vast scale with minimal environmental damage. Nearly 25 years ago, the Burkina Faso–born German architect Francis Kéré developed a similar kind of durable, handmade earth-and-cement brick for a primary school in his home village of Gando. The project made him famous and contributed to his 2022 Pritzker Prize.
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Los Angeles Rents Are Going Up By The Hour. Realtors Gita Vasseghi and Melea Avrach started hearing from clients looking for temporary housing as early as January 7, the day the Los Angeles fires?began. Based on the East Side of the city, they quickly began helping friends, friends of friends, and desperate cold callers displaced from the massive Eaton fire?in Altadena. But just as soon as they mobilized, something else started happening: Prices started going up. By the 8th, when tens of thousands of people had already been evacuated, a client sent them a Zillow listing for a little two-bedroom house priced at $3,800 a month, on the market unrented for 60 days before the fires, in a part of Altadena that did not burn. Within the hour, and by the time the agents were able to check it out for themselves, the price had almost doubled to $6,500. Vasseghi and Avrach were sure they could negotiate the original rate when they told the listing agent it was for clients who had just lost everything they owned. But when they called him, it became clear the price had gone up?because?of people like their clients. He said, simply, “Too many people want this house. You’ll have to be competitive.” Within the weeks since Los Angeles’s worst-ever disaster began, rent gouging has become a crisis on top of the crisis. It’s against the law to increase a rental price by more than 10 percent once a state of emergency has been declared.?But this fact doesn’t seem to be worrying the agents jacking up the numbers on open listings to desperate Angelenos. That behavior can result in a fine or even jail time. But according to sites like Zillow, the gouging is rampant anyway. “People smell blood in the water,” Jeffrey Saad, another Compass agent, told me. No tax bracket is being spared. A two-bed lower-level apartment in Brentwood Heights went up 19 percent to $3,100 on January 12; a five-bed, five-bath nearby went from $12,000 to $15,000 on January 10. Jason Oppenheim, the?Selling Sunset?star, told BBC News on January 12 that even his clients were getting scalped. Some of the listings have gone up more than once, as the fires got worse, like a three-bed in Beverly Glen with a terrace that went from $12,000 on the 8th to $15,000 on the 13th. Saad has noticed the same: “I saw some agents increasing prices by the hour on Tuesday and Wednesday, as the fires got worse,” he says. Straightforward, illegal gouging is not even the only problem. Nothing in California’s penal code prevents prospective tenants from offering more on a listing. And the bidding wars?are accordingly raging. Especially on the West Side, where a greater population of wealthy evacuees and survivors displaced from the Palisades fire?have more to spend. “Those people are coming in with Monopoly money," one agent said, some with quotes from their insurance companies. “I was trying to get one client into a listing for $17,000,” Saad says. “By the end of the call, we were at $29,000, because that’s how much other people were willing to pay.”
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How to Help Victims of the L.A. Wildfires.?Roughly 150,000 Los Angeles–area residents remain under mandatory evacuation orders and at least 24 people have been killed and 16 are missing (numbers that officials say are expected to rise) as devastating wildfires continue to sweep through Southern California, destroying homes and landmarks. The fires are the most destructive in L.A. history; the largest of them, in the Pacific Palisades, has burned more than 27,000 acres of the coastal neighborhood and is at containment as of this morning. More than 10,000 homes?have been lost, including many belonging to celebrities. The blazes burned a combined area?larger than the city limits of San Francisco. Over 1,000 additional California National Guard?members have been deployed to Los Angeles to protect evacuated areas. “This is going to be devastating, a devastating loss, for all of Los Angeles,” L.A. councilwoman Traci Park said in a statement, per the Times?If you’re able, here’s how to help. Where to donate:
1.???Donate to?the Dream Center,?an L.A.-based charitable organization that’s offering?emergency shelter?to those evacuated in the Palisades and Eaton Canyon fires.
2.???Donate to?Friends in Deed,?a nonprofit providing services for the homeless, as it opens its Bad Weather Shelter amid the fires.
3.???The?California Fire Foundation?provides resources to firefighters, fallen firefighters, their families, and the communities they serve.
4.???Donate to Direct Relief’s?California Fire Relief,?which provides?N-95 masks, medicine, and resources to health-care agencies and first responders in areas affected by wildfires.
5.???The?California Community Fund?has a recovery fund dedicated to helping victims of wildfires. You can?donate here.
6.???Donate?to?Baby2Baby’s Fire Relief Fund?as the organization works to provide vulnerable children and their families with diapers, food, formula, and more essentials.
8.???Donate to?World Central Kitchen?as it provides meals for first responders and impacted families.
9.???Volunteer with?or contribute to?With/Creators’ donation drive.?The L.A.-based creative studio has partnered with other local organizations to provide impacted women with sanitary products and other hygiene essentials.
10. Donate to?International Medical Corps,?which has an emergency response team on the ground in Los Angeles and is working to deliver relief supplies, including hygiene and first-aid kits, to those affected.
11. Americares?is accepting donations to provide medicine and medical supplies to wildfire victims.
12. Donate to the?GlobalGiving California?Wildfire?Relief Fund?to help provide immediate essentials and long-term relief to Californians impacted by the fires.
13. Donate to the?Salvation Army’s?emergency disaster-relief efforts.
14. Donate to the?Wildfire Relief Fund?at the American Red Cross.
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15. Project HOPE?is on the ground in Los Angeles and providing urgent aid to wildfire survivors.
17. Donate to the?Pasadena Humane,?which has taken in over 400 animals from the Eaton fire and is providing medical care to those injured in the fires.
18. If you’re located in the Los Angeles area and can offer temporary foster care to dogs displaced by the wildfires, sign up at the?Canine Rescue Club.
19. Fi Dogs?has started a?GoFundMe?to raise money for Los Angeles animal shelters.
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Out-Of-State Investing Summit. Why buy one house for $800,000 in Los Angeles (with negative cash flow) when you can buy eight houses (or more) in another state for the same amount of money, and enjoy positive cash flow without any of the landlord headaches? If you appreciate the significance of this question, you must attend our 6th Annual “Out-of-State Investing Summit.” Each year, the Los Angeles County Real Estate Investors Association evaluates the strongest cities in the United States for dynamic job and population growth, along with affordability, landlord-friendly laws, renter desirability, low prices, and positive cash flow. We then identified the most respected turnkey operations in each of these cities. Companies that buy distressed properties at substantial discounts, renovates the properties efficiently, makes them rent-ready, finds qualified tenants, sells them to investors like you, and then manages the properties for you professionally. The marvelous thing about turnkey companies is that they do all the work and then send you a check every month. This is why the theme of this year’s Summit is “Be an Investor – Not a Landlord.” Saturday, February 22, 2025, 9:00 am to 2:00 pm. Iman Cultural Center, 3376 Motor Avenue, Culver City, CA. $49.00 if paid before February 15. After February 15, the price increases to $99.00 per person. Don’t miss it.?This is the ultimate cashflow strategy.
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Vendors Expo Returns!?Our world-famous "Vendors Expo"?returns in 2025, on Thursday night,?February 13, 2025. The Vendor Expo opens starting at 6:30 pm. We'll have 30+ of the finest vendors featuring real estate products and services you will want to utilize as a successful investor. Our Vendor Expo will be held at the Iman Cultural Center, 3376 Motor Avenue (between National and Palms), Culver City CA.?FREE Admission.?Please RSVP at our website, LARealEstateInvestors.com.
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February LAC-REIA Meeting. Our special guest for February will be investor Jeremy Beland. Jeremy Beland is a real estate investor with extensive knowledge in investing, wholesaling and acquiring off-market properties. In 2017, at 40 years old, he sold his townhouse and downsized to a tiny apartment, using the equity to invest in a beginner’s coaching program and start his wholesaling journey. Since then, he has completed over?450 off-market acquisitions, utilizing various exit strategies like wholesaling, flipping, and rentals. His efforts have generated?$10 million?in total gross profits, transforming multiple markets into million-dollar successes. Now he is passionate about showing others how to achieve the same financial freedom and success. We are fortunate having Jeremy visiting us from New Hampshire.?Thursday night, February 13, 2025, 6:30 to 9:30 pm, Iman Cultural Center, 3376 Motor Avenue, Culver City, CA 90034. Free admission. RSVP: www.LARealEstateInvestors.com.
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This Week. The next Fed meeting will take place on Wednesday. No change in the federal funds rate is expected, and investors will look for additional guidance from officials on their plans regarding future monetary policy. For economic reports, New Home Sales will be released on Monday. Fourth quarter Gross Domestic Product (GDP), the broadest measure of economic activity, will come out on Thursday. Personal Income and the PCE price index, the inflation indicator favored by the Fed, will be released on Friday.
Weekly Changes:
10-Year Treasuries:????????????????????????Flat????000 bps
Dow Jones Average:??????????????????????Rose??900 points
NASDAQ:???????????????????????????????????????Rose??400 points
Calendar:
Wednesday (1/20):??????????????????????????Fed Meeting
Thursday (1/30):??????????????????????????????GDP
Friday (1/31):???????????????????????????????????Core PCE
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For further information, comments, and questions:
Lloyd Segal
President
Los Angeles County Real Estate Investors Association, LLC
310-792-6404
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