The Impact of the California Wildfires on the California Construction Market

How will the California wildfires affect the construction industry in 2025?

In January of this year, wildfires burned over 37,000 acres in Los Angeles, California, destroying over 16,000 buildings. Now, many people are left needing to rebuild their homes and businesses.

ConstructConnect® Insight data predicts growth in construction across the Los Angeles metropolitan area in the coming years. Civil and non-residential construction are expected to grow steadily, but the residential sector is set to see significant growth. From 2025 to 2026, residential projects in Los Angeles are projected to increase by 25% as rebuilding efforts begin.

While it’s great to see more opportunities for builders, it also means facing some new challenges. Here are three of the biggest issues construction professionals may face if they choose to build in southern California right now.

1. The demand for skilled labor will grow, even as the industry faces an ongoing labor shortage.

Like much of the U.S., California’s construction industry has faced a labor shortage in recent years. The damage done by the wildfires means more need for construction workers in the months and years ahead.

Many homes must be completely rebuilt, which requires jobs like roofing, framing, and foundation work. A lack of skilled workers in these high-demand trades could slow down project timelines.

2. Building materials may face delays and/or increased costs.

With so many people rebuilding at the same time, materials like wood, steel, and glass are in high demand, which will raise prices. New tariffs on Canadian imports may make these materials even more expensive.

In burned areas of Los Angeles, roads and power lines are also damaged. This could slow down deliveries, making rebuilding longer and more costly.

3. Construction could take longer due to stricter fire safety regulations.

California has some strict building regulations to protect homes from wildfires. Builders must use fire-resistant materials, especially in areas where fires are common.

To help people rebuild faster, California Governor Gavin Newsom has made it easier to get building permits. While this is a good sign for speeding up rebuilding efforts, many Los Angeles residents want to rebuild in ways that reduce the risk of future fire damage. This could lead to a higher demand for more fire-safe building practices, even if the state doesn’t enforce them.

Moving Forward

If you’re looking for more information about possible impacts to the California market and beyond, be sure to register for our Spring Outlook Economic webcast on May 8. Learn what top economists from ConstructConnect, AGC, and AIA have to say about the construction forecast for 2025, including issues like labor challenges, material costs, and inflation.