Los Angeles wildfires are sending rental housing prices soaring, raising concerns of price gouging

the Devastating forest fires That hit the Los Angeles area in recent weeks has restricted an already tight housing market, driving up rental prices that have raised concerns about price gouging.

Authorities said that more than 12,000 buildings were destroyed by the hurricane Los Angeles Wildfires in the area, affecting the Pacific Palisades and Altadena area, as well as the Malibu area. At least 27 people have been killed in the wildfires, which remain a threat as firefighters work to contain blazes caused by Santa Ana winds.

With the fires destroying a large number of homes in those areas, and many people in the area still under evacuation orders due to the dynamic nature of wildfires, area residents looking for rental housing options are seeing prices rise significantly compared to the market before the fires. Fires broke out.

“The wildfires have had a profound and far-reaching impact on the Los Angeles housing market,” David Berg, co-founder of Smith & Berg real estate group Compass, told FOX Business. “Entire neighborhoods have been destroyed, displacing homeowners and putting enormous pressure on already limited housing stock. Families who have lost their homes are urgently looking for rentals, creating increased demand in surrounding communities.”

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Darryl Fairweather, Redfin’s chief economist, expressed similar sentiments, telling FOX Business that those currently seeking… Accommodation for rent We see rents rising, but “people whose rents go up soon may get a rent increase they didn’t expect.” Some residents are looking for rentals as far away as Santa Barbara because of high demand near fire zones, Fairweather added.

Joel Berner, chief economist at Realtor.com, told FOX Business in an interview that from Jan. 4-11, there were several zip codes near fire areas that saw notable jumps in rental prices after the fires. Zip code 90403, which he explained is located in Santa Monica southwest of the Palisades Fire, saw rents rise 33.9%. Santa Monica’s other zip code, 90404, saw rents rise 23%, while the 91125 zip code in central Pasadena also saw a 20% rent hike in that period.

Berner noted that the data is still “noisy” as other parts of Los Angeles have seen rents decline weekly, and that once there is a full week of post-fire data, it may be easier to see the full impact of the rental market impact.

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California state law caps price increases following a declared state of emergency at 10% of the pre-emergency price, and Attorney General Rob Bonta confirmed in a recent press conference that the anti-price gouging rule applies to housing and rentals.

Zillow, the real estate marketplace that includes Rental listingstold FOX Business that it is “taking action to help address price gouging in rental listings in the affected areas that appear on our platform” by “activating our internal systems to report potential violations and remove listings with price increases that exceed the state of emergency threshold.”

“If renters see a potential violation, we encourage them to report the listing to Zillow and California authorities. We believe it is imperative for housing providers to follow local housing rules, including protecting consumers from price gouging during and after a natural disaster, and we continue to do so,” a Zillow spokesperson statement continued. “We provide resources to help them understand their responsibilities.”

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Although homes in fire zones were generally of great value, some residents may be older or have more modest incomes than theirs, Stuart Gabriel, a finance professor and director of the UCLA Zeman Center for Real Estate, told FOX Business in an interview. Wealthier neighbours, with some of the residences dating back six or seven decades. This could pose challenges as they look to rebuild.

“You have to separate the value of the home from its occupants, and in the case of homes built in the 1950s and 1960s, the owners clearly have wealth in the form of their home equity — but they may not be high-income families,” he explained. “In fact, these families may be They have very modest incomes, and in many cases may be older families.

He added: “Therefore, it is not at all clear that these families have the capabilities or even the financial capacity to withdraw the loans they need and participate in the rebuilding process, which will be difficult, complex, take some time, and require enormous energy.” He added.

Gabriel noted that state and local authorities are looking to speed up the process of rebuilding similar structures in fire-affected areas, but added that there will likely be changes in terms of building density, use of fire-resistant materials, and different landscaping. And other infrastructure changes Addressing fire risks.

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“These neighborhoods are going to be rebuilt. That can’t happen — these neighborhoods are too dear, too valuable. But replacing the facilities and putting them back together and getting these communities back to a new way will take time.” “Balance,” Gabriel said.