Selling vs. Rebuilding: What’s the Smarter Long-Term Move in the Palisades After the Fires?

The Pacific Palisades, known for its coastal elegance, sweeping canyon views, and luxurious estates, has long stood as one of the most desirable neighborhoods in Los Angeles. But for many homeowners and investors in this enclave, the recent wave of California wildfires has left behind not just ashes—but uncertainty.

Once the smoke clears and insurance claims are processed, property owners face a monumental decision: should you rebuild on your lot or sell it and move on? In Pacific Palisades, many are genuinely torn—balancing rising rebuild costs with the emotional weight of starting over.

At Thornton Development Group (TDG), we specialize in navigating these high-stakes decisions with clarity, precision, and a long-term investment lens. In this guide, we’ll break down the key financial, emotional, and strategic factors to consider when deciding between rebuilding or selling in the wake of a fire.

1. Understanding the State of the Lot and Insurance Payout

Before making any decision, assess what your insurance policy covers. Typical categories include:

• Dwelling replacement: Funds to rebuild the structure itself

• Personal property: Compensation for destroyed belongings

• Additional Living Expenses (ALE): Temporary housing

• Debris removal and code upgrades: Essential for rebuild feasibility

Get a clear breakdown from your insurance adjuster and, if necessary, bring in a third-party construction consultant or estimator to compare costs with current building market rates in the Palisades.

2. Evaluate the True Cost of Rebuilding in the Palisades

Even with insurance, rebuilding in a luxury neighborhood like the Palisades comes with premium costs:

• Construction pricing: High-end materials, labor shortages, and inflation

• Permitting: Coastal Commission and city-specific layers of approvals

• Soil and hillside concerns: Especially important post-fire, requiring geotechnical testing

• New regulations: Fire-resistant building codes, solar requirements, and more

Rebuilding can be rewarding but involves a long, complex journey—often 18 to 36 months.

3. The Value of the Land Itself

Even without a structure, Palisades lots retain significant value. Desirability of the location, views, access, and school districts keep buyer interest strong.

TDG has seen fire-damaged lots attract:

• Developers: Seeking to build new spec homes with strong ROI

• Investors: Looking for long-term land holds

• End-users: Homeowners willing to build from the ground up

Sometimes the land alone may command enough value to offset rebuilding risks entirely. Consider ordering a developer opinion of value (DOV) alongside a formal appraisal.

4. Financial Timeline: Short-Term Liquidity vs. Long-Term Gains

Selling can offer immediate cash flow, while rebuilding involves prolonged capital commitment. Here’s a quick comparison:

A financial advisor can help you model both scenarios based on your goals.

5. Emotional Readiness and Personal Lifestyle Goals

Beyond numbers, consider your emotional and lifestyle readiness:

• Can you handle the stress of managing a rebuild?

• Are you attached to the location or ready for a new chapter?

• Is your family situation conducive to 2+ years of waiting?

Maximizing real estate value isn’t just about numbers. Emotions matter. We've seen sellers experience both peace and regret. The key is making a values-aligned choice one that reflects your priorities, lifestyle, and long-term goals.

6. Tax Considerations and Financial Planning

Selling or rebuilding both have tax implications. Key issues include:

• Capital gains: Depending on basis and insurance payout

• Tax on insurance proceeds: ALE is generally non-taxable, but property reimbursements may not be

• 1031 Exchange: Reinvest into another property to defer taxes

• Reinvestment timelines: To maintain IRS compliance

Consult a CPA or real estate tax attorney for guidance.

7. Development Partnerships: A Third Option

You don’t have to go it alone. At TDG, we offer joint venture models where you bring the land and we handle design, construction, and sales. When the property sells, you share in the profits without shouldering the development risk.

This model allows:

• Lower capital outlay

• Partnership with seasoned experts

• Participation in upside potential

It’s ideal for landowners who want to stay involved but need support.

8. What the Market Says in 2025

As of mid-2025, demand for new homes in the Palisades remains strong. Key trends include:

• Increased interest in fire-resistant, sustainable new builds

• Low inventory of new construction homes

• Strong buyer demand from international markets

If you’re considering rebuilding, these indicators support long-term ROI potential. If selling, they point to a favorable climate for listing land.

9. Case Studies: Real Stories, Real Results

Case 1: Rebuild for Legacy
A longtime homeowner chose to rebuild with TDG after her insurance payout. She now lives in a modern hillside residence with panoramic views—valued at nearly twice the original home’s price.

Case 2: Sell and Simplify
A couple sold their fire-damaged lot to TDG, used the proceeds to purchase a turnkey home elsewhere, and avoided a multi-year rebuild entirely. Peace of mind became their ultimate ROI.

Case 3: Joint Venture Success
An investor retained partial ownership while TDG rebuilt on their lot. The new luxury home sold above asking, and both parties profited significantly.

10. Your Next Move: Questions to Ask

Before making your decision, reflect on these key questions:

• What’s your long-term vision for the property?

• Do you have the time, energy, and capital to rebuild?

• What would peace of mind look like in 12 months?

• How do your family or investment goals align with each path?

Let TDG Help You Make the Smartest Move

Whether you choose to rebuild, sell, or explore a strategic partnership, TDG is here to help you evaluate your options with expert insight. Our goal is to help you unlock the full potential of your property—even after disaster.