Sarah Wolak of HousingWire reports on the ongoing devastating fires surrounding Los Angeles. These wildfires, burning over 60 square miles, have displaced more than 150,000 residents, killed 24 people, and destroyed nearly 12,000 structures. With evacuation orders in place, many are turning to rental properties for temporary shelter amid fears of price gouging. Many are emphasizing the urgent focus on identifying available rentals to house those who have lost their homes.
Wolak also reports in a second article that the wildfires will worsen the state’s ongoing insurance crisis. The fires have prompted the Office of the Comptroller of the Currency to allow financial institutions to close affected offices. California’s extended wildfire seasons, exacerbated by climate change, continue to strain the insurance market, leaving homeowners and businesses bracing for rising premiums and uncertain coverage.
Liam Dillon of the LA Times reports that the wildfires will worsen the region’s housing affordability crisis, with rents likely to rise, especially near the heavily impacted areas of Pacific Palisades and Altadena. Experts cite intense competition for contractors, insurance challenges, and displacement-driven demand as contributing factors. Tenant advocates warn of potential rent hikes and evictions despite state price-gouging rules, emphasizing the need for stricter enforcement to protect vulnerable renters.
Snejana Farberov of Realtor.com comments that California has imposed a yearlong ban on insurance policy cancellations in parts of Los Angeles devastated by wildfires, effective through January 2026. The moratorium, announced by Insurance Commissioner Ricardo Lara, protects homeowners in the Pacific Palisades and areas affected by the Eaton fire, regardless of loss, as residents recover. This follows a new rule requiring insurers to cover high-risk areas while allowing them to pass costs to customers.
Finally, Daniella Genovese of FOX Business notes that while damaged homes will face delays, properties outside the fire zone are anticipated to rebound quickly due to the area’s desirability. Redfin data shows rebuilding projects often begin within a year, with local authorities expediting permits and design reviews. However, the fires are likely to drive up housing costs, reflecting broader trends of increased expenses in wildfire-impacted regions.
Jobs data
Charlotte Wheeler of RealPage reports that the labor market closed 2024 with a strong performance, adding 256,000 jobs in December—its largest monthly gain in nine months and exceeding expectations of 155,000 to 165,000 jobs. This marks the 48th consecutive month of job growth, tying a historic record. The Education/Health Services sector led with 80,000 new jobs, while Manufacturing and Mining/Logging experienced losses.
Source: RealPage (January 2025)
According to CBRE, the construction sector added 8,000 jobs in December, significantly lower than its average monthly addition of 14,500 jobs over the past year. Although the industry is typically very sensitive to interest rate changes, it has benefited from federal programs that support large-scale projects and a housing shortage that is driving new residential construction. CBRE comments that: “A significant slowdown in European and Chinese economic growth poses a potential risk to our outlook. Nevertheless, we expect generally favorable economic conditions that support the U.S. real estate sector.”
Jeff Cox of CNBC reports on the data, highlighting that unemployment fell to 4.1% in December, slightly below expectations, as nonfarm payrolls surged, marking a robust year-end. A broader measure of unemployment, including discouraged and underemployed workers, dropped to 7.5%, the lowest since June 2024. These figures reflect a strong labor market, giving the Federal Reserve less incentive to cut interest rates as inflation remains steady.
Source: CNBC (January 2025)
Indeed, Fergal McAlinden of MPA reports on the outlook for rate cuts, highlighting that December’s robust job growth strengthens the case for the Fed to pause further interest rate cuts in 2025. The unemployment rate dropped to 4.1%, and long-term unemployment saw a slight decline, signaling a resilient labor market. These figures reduce the urgency for monetary easing, potentially pushing mortgage rates higher in the near term as the Fed reevaluates its policy stance.
As of this week, the market is predicting a 97.5% chance of a rate pause for the January 29th Federal Reserve meeting.
That said, Alicia Wallace of CNN reports that some economic caution is warranted as we enter 2025:
“Job growth is slowing, hiring has dropped off, the manufacturing sector is exhibiting some weakness and people are staying unemployed for longer, fueling concerns that a greater weakening could be afoot. The job gains also have been somewhat narrow. The lion’s share (about 75%) of the job gains in 2024 occurred in health care, government (specifically, state and local hires) and leisure and hospitality — three industries that were continuing to play catch-up from the pandemic.”
Population growth
Jesse Wade of the National Association of Home Builders (NAHB) reports on population growth, noting that the U.S. population grew by 3.3 million (0.98%) between July 2023 and 2024, marking the highest growth rate since 2001, driven primarily by net international migration of 2.8 million people.
Source: NAHB (January 2025)
Wade reports that natural growth, with births outpacing deaths, contributed an additional 518,638 in growth. All U.S. regions experienced population increases, with the South leading at 1.34%. At the state level, 47 states and D.C. saw growth, with D.C. recording the highest rate (2.13%), followed by Florida (2.00%) and Texas (1.80%).
That said, Dave Gallagher of Real Estate News reports that population growth is projected to turn negative within a decade without immigration. This reality is expected to reshape housing demand, with fewer new households and reduced need for new home construction. While the next five years will see strong demand to address the current housing shortage, the 2030s will likely bring a shift toward remodeling and maintaining aging housing stock as younger generations, smaller in size, replace boomers and millennials.
Source: Harvard (January 2025)
Jon Kamp, Paul Overberg, and Max Rust of the Wall Street Journal report on these trends, highlighting that immigrants accounted for 84% of U.S. population growth in the year ending June 30, 2024, as net migration surged, reflecting a critical shift in population dynamics. This growth, fueled by rising immigration, declining birth rates, and an aging population, drove the nation’s fastest population increase since 2001, bringing the total to 340.1 million.
Source: WSJ (January 2025)
“Proposals to limit immigration and boost deportations could affect the nation’s ability to grow, given its heavy reliance on immigrants. A Brookings Institution study found that under an aggressive enforcement regime, the U.S. could see a net exodus of 650,000 immigrants in the first year of Trump’s second term. A significant loss of immigrant labor could put upward pressure on wages and prices as the Federal Reserve is still trying to lower inflation, which remains above the central bank’s target.”
Finally, the Brookings Institute commented on the Census data: “More realistic immigration assumptions makes plain how demographically significant immigration can be for population stability in a growth environment of low natural increase. While unusual growth circumstances occurred during this period (initially low natural increase due to reduced births and increased deaths during the pandemic, and unusually sharp rises in immigration due to heightened asylee and humanitarian inflows), this analysis shows how important immigration can be in generating population growth or even just stability in an otherwise low-growth environment.”