California's Governor Newsom Gets Tough With Predatory Wildfire Investors

There’s no smoke without fire. In this case, the fire is the devastating L.A. wildfires that have caused billions of dollars worth of damage and left thousands homeless. The smoke is the predatory investors who are offering low-ball cash offers to seize valuable land for pennies on the dollar. California Governor Newsom isn’t having it.

The Democrat has swooped in to protect Californians vulnerable to land speculators by issuing an executive order to punish them for “making aggressive and unsolicited cash offers” to wildfire victims accountable “through stronger enforcement and prosecution,” according to a State press release.

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The sheer magnitude of insured loss — estimated to be the largest in U.S. history — means desperate homeowners or renters might make poor choices with the lure of quick cash that could harm them in the long run, worsening the housing crisis in the Golden State. Newsom told Fox 11 — as reported by Newsweek — that he had talked with Hawaii Governor Josh Green, whose residents had received similar offers in the wake of the Hawaiian island of Maui in August 2023. Families who had called the island home for generations were threatened with displacement because of their desperate need for cash. Newsom’s order is based on what was issued by the Hawaii governor.

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What the Order Does

The executive order protects residents in areas affected by fires, including residences, businesses, cultural centers and places of worship. According to the order, making any unsolicited offer to an owner of real property located in these areas “to purchase or otherwise acquire any interest in the real estate property for an amount less than the fair market value of the property or interest in the property on January 6, 2025” is forbidden for three months from January 14.

The order also states: “Undermarket offers by opportunistic investors in communities such as Altadena threaten the character and vibrancy of the community and could displace and endanger vulnerable residents who have long ties and investments in the community.”

California’s Department of Real Estate will enforce the order. The department is required to inform authorities of any violations.

Newsom Stands Firm

California Governor Gavin Newsom said in a statement accompanying the new order: “As families mourn, the last thing they need is greedy speculators taking advantage of their pain. I have heard firsthand from community members and victims who have received unsolicited and predatory offers from speculators offering cash far below market value—some while their homes were burning.

“We will not allow greedy developers to rip off these working-class communities at a time when they need more support than ever before.”

Los Angeles City Councilwoman Traci Park echoed Newsom’s comments: “As you can imagine, [the fires] have had a traumatic and life-changing impact on thousands of lives. [ …] Our singular goal must be to ensure that residents have the resources they need to rebuild their lives and come home.”

According to CBS News, Newsom signed a separate executive order to fast-track debris removal in the fire zones and called on legislators to approve $2.5 billion for fire aid.

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A Lack Of Labor For Developers

Should developers buy land at a discount, finding the workers to build on it could prove difficult. Subcontractors and laborers favored in California’s residential construction industry might be liable to face deportation under the new government’s hardline deportation policy.

The L.A. Times quoted that an estimated 41% of construction workers in California are immigrants, as per the National Assn. of Home Builders. That number is greater in residential construction, which is mainly nonunionized and less heavily regulated than large commercial projects. The pay is lower, and many workers don’t have U.S. legal status.

“There simply aren’t enough roofers and drywallers and all these other skilled trades in this country,” said Nik Theodore, a University of Illinois Chicago professor who studies disaster recovery in the Department of Urban Planning and Policy. “Then you put the backdrop of the campaign promises of the incoming Trump administration around immigration enforcement and deportations; we’re facing a quite serious situation.”

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