In the Beverly Grove neighborhood of Los Angeles, the asking rent for a two-bedroom condo jumped from $5,000 to $8,000 in the wake of
the fires that started last week and have left thousands homeless.
In Venice, a single-family house saw a jump of nearly 60%. In Santa Monica, an owner listed a five-bedroom house for $15,000 above what they were asking last year — a gain of more than 100%.
Temporary price gouging protections in place because of the
fires are supposed to stop such dramatic rent hikes, but a Times review of online listings this week indicate illegal increases are relatively common. Such listings, which have been blasted on social media, are starting an uproar, causing some landlords to shift course and leading to calls for authorities to prosecute those profiteering off pain.
“They need to move quickly and make an example out of these people,” said Larry Gross, executive director of the Coalition for Economic Survival, a local tenant rights group.
Even some landlords’ organizations are joining the chorus.
“Throw the book at them,” Fred Sutton, a senior vice president with the California Apartment Assn., told the L.A. City Council on Tuesday.
California’s
price gouging rules kick in following declared states of emergency and last for 30 days unless they are extended. In the case of the local fires, that means landlords generally cannot charge more than 10% above what they were charging or advertising before Jan. 7.
California Atty. Gen. Rob Bonta has warned property owners and the public of
the rules and vowed to crack down on violators.
Bonta’s office would not disclose the number of price gouging complaints it has received. But Bonta has enlisted teams of lawyers from his offices across the state to evaluate those that have been submitted, a spokesperson for the agency said.
“It’s important that the victims of these fires be treated with respect and dignity and fairness,” Bonta said at a news conference in Los Angeles on Saturday. “Price gouging is illegal. We will not stand for it.”
If convicted, landlords face up to a year in jail and thousands of dollars in fines. But the matter has rarely been prosecuted after previous major wildfires, and some tenant advocates say price gouging is now so prevalent, because people think they can get away with it.
In 2018, the attorney general’s office charged just two cases against landlords and real estate agents for alleged illegal price hikes following fires that destroyed thousands of homes in Northern California. Following complaints from advocates and local prosecutors that the law was too difficult to enforce, state legislators expanded it later that year.
At the urging of Los Angeles City Councilmember
Traci Park, the city moved Tuesday to increase potential price-gouging penalties to $30,000 and to ensure it has the resources to investigate and prosecute cases.
In a way, modern technology makes it easier than ever to track potential violations.
As fires continue to burn, tenant advocates and everyday people are scouring rental listing websites and compiling shareable databases of suspected gouging, sharing them with authorities and the press and on social media.
Chelsea Kirk, an organizer overseeing one spreadsheet, said the practice appears
“widespread and rampant” and that people are venting their outrage directly to landlords and agents.
“People are calling me saying, ‘I’m making it my hobby today to call every person on this list and telling them that what they’re doing is illegal,’” said Kirk, a policy director at nonprofit Strategic Actions for a Just Economy.
So far, it seems to be working. Many of the price-gouging listings have either been removed or relisted at 10% or less.
Chad Singer, a real estate agent with Amalfi Estates, said part of the problem is lack of knowledge of the rules among landlords.
“The people I’ve educated immediately changed it once they realized it was illegal,” Singer said.
Still, complications remain. Singer said leases have already been signed at inflated prices, raising the prospect of lawsuits from the renters who signed. There have also been
bidding wars that occur outside the realm of any formal listing.
One man told The Times his brother-in-law showed up at a rental open house near Brentwood and the listing agent told him to fill out a form with his best offer.
“We assume it is still going on in the shadows,” said Anya Lawler, a policy advocate with the California Rural Legal Assistance Foundation, noting such cases are likely to be harder to prosecute.
She also worries that price gouging could pick up again after an initial backlash subsides. “We are not out of the woods by any stretch of the imagination,” she said.
Some real estate companies are taking action where they can.
Zillow, the popular real estate listing website, allows viewers to see a history of rent changes on a listing and has been featured in social media posts.
Emily McDonald, a spokesperson for the company, said that while rent is set by landlords or their representatives, Zillow has started to use its “internal systems” to find potential violations and remove listings “with price increases that exceed the state of emergency threshold.”
“Zillow takes the responsibility consumers place on us to promote fair renting practices seriously — and even more so during times of crisis,” McDonald said. “If renters see a potential violation, we encourage them to report the listing to Zillow and California authorities.”
In all, the fires in Los Angeles County have damaged or destroyed more than 12,000 homes and other structures, creating a wave of newly homeless families in a region already in the throes of an affordable housing crisis.
There’s been not only fear of price gouging, but a general ripple effect of higher costs, as relatively well-off displaced homeowners seek housing in different neighborhoods, causing already high rent to rise there and existing tenants to feel pressure to leave.
An immediate surge in costs is expected, but pressures on the housing market should ease as rebuilding efforts ramp up, said Christopher Thornberg, founding partner of Beacon Economics. After devastating fires in Napa and Sonoma counties in 2017, rental vacancy rates dipped while prices shot up. But those effects were temporary, he said.
“It faded after a year and then it was back to trend,” Thornberg said.
Given the scale of destruction in L.A. County, however, rebuilding efforts are likely to take much longer than a year, and the region already has been struggling to permit enough new housing to meet demand.
State and local landlord industry representatives say they understand the region is in the middle of a
crisis and have been encouraging property owners to provide discounts to wildfire-affected residents.
The Apartment Assn. of Greater Los Angeles
created a website for landlords to advertise short- and long-term rentals.
The groups have been educating their members about price gouging laws and are asking third-party listing services to post warnings. Deb Carlton, executive vice president with the California Apartment Assn., said reports of widespread gouging were “maddening” and advocated for strict enforcement of the law.
“Landlords are absolutely horrified,” Carlton said.
But some of them appear to think differently.
One real estate agent said her client said the “10% cap just isn’t realistic for how much demand there is in the market.” According to the agent, who asked for anonymity in order to speak freely, the landlord ordered her to increase rent on a Santa Monica listing beyond the allowable threshold, bypassing the agent’s warning about the law.
“They said they doubt it’ll be prosecuted.”
