Public officials and private landlords in Los Angeles are creating programs and laws in response to reports of significant price gouging on rental properties throughout the region as evacuees seek shelter from the fires that remain largely uncontained.
State officials have extended temporary price gouging restrictions through March 8, preventing landlords in Los Angeles from increasing rents by more than 10% above what they were charging or advertising before Jan. 7.
“Folks across the region are being preyed upon by greedy businesses and landlords, scam artists, and predatory buyers looking to make a quick buck off their pain,” California Attorney General Rob Bonta said in a statement. “My office is here to say this is not only wrong, it is illegal.”
Meanwhile, a group of 15 commercial real estate companies and organizations led by the California Apartment Association has formed the LA Wildfires CRE Pledge for Action to combat price gouging. The group aims to educate peers about the rules governing rent hikes and the penalties for violations, while also working with third-party listing services to flag offenders and promote available space to evacuees.
Some multifamily landlords say they are being unfairly lumped in with luxury homeowners seeking to cash in on residents forced to evacuate multimillion-dollar homes in Pacific Palisades and Malibu. In response, multifamily owners across Los Angeles are offering deals on rent and special packages to help evacuees.
Demand climbs
The wildfires, including those in the Palisades and Eaton, have caused officials to evacuate some 88,000 people from their homes, with another 84,800 under evacuation warnings due to fire risk as of Thursday.
As evacuees from the fire zones seek temporary housing, advertised rental rates on some single-family homes, condos and multifamily units skyrocketed by double digits compared to their original listing rates before the fires started, triggering social media watchdogs and reports to showcase such gouging practices.
Some landlords are flouting price-gouging restrictions in part due to a lack of consequences in prior fires, according to tenant rights organization Coalition for Economic Survival.
“The Penal code 396 price gouging law is in effect, and those who are violating the law should have the book thrown at them," Fred Sutton, senior vice president of public affairs at the California Apartment Association, said in a statement.
Even without price gouging, the fires could cause rents to rise because of the sudden absence of inventory. More than 7,400 multifamily units are at risk of being destroyed by one of the wildfires, according to a CoStar analysis. Many of the people who live in those units are actively seeking temporary housing elsewhere, people tell CoStar News.
Indeed, Ryan Patap, a senior director of market analytics for Los Angeles at CoStar Group, said “it's a no-brainer" that rent rates are going to go up. "The questions are: How much? And how far does it spread across the Los Angeles market?"
Some landlords note that significant rent hikes are isolated in areas like Brentwood and Santa Monica, and primarily involve high-end luxury home rentals.
For PMI Properties, rental traffic is down at the developer's 27 apartment projects in Los Angeles, according to Jeffrey Palmer, a partner at the company.
“It's crucial to avoid generalizations,” Palmer said. “Let's focus on constructive solutions that assist those affected by the wildfires without casting undue blame on responsible housing providers.”
Recovery efforts
Current members of the LA Wildfires CRE Pledge for Action are Benedict Canyon Equities; Camden; Christina Real Estate Investors; Cityview; CREDE Group; Hanes Properties; LaTerra Development; Lincoln Property Co.; Marcus & Millichap; Mata Construction; North Palisade Partners; Paragon Commercial Group; TruAmerica Multifamily; the California Apartment Association; and NAIOP SoCal.
The group collectively owns or manages hundreds of thousands of multifamily units in neighborhoods across Los Angeles County.
All of the companies in the group are offering discounts to help fire evacuees recover. These deals range from offering free rent and freezing rates to waiving deposits and fees.
For its part, Camden is temporarily waiving application fees, offering flexible lease terms and freezing new lease rates at its 1,500 units across four communities in the area. And LaTerra is giving space to those in need at its 1,283 multifamily units in Los Angeles.
"We are offering vacant units at properties for low cost, some for as much as just a dollar to help people bridge to recovery," Chris Tourtellotte, managing director of LaTerra Development, said in a statement.