The housing market in Southern California is set to become significantly more cutthroat after catastrophic firestorms destroyed over 12,000 homes and various structures in the Los Angeles vicinity, displacing tens of thousands of residents.
Reports of rent-gouging are already surfacing, prompting local leaders to send strong warnings against such practices, urging the community to report unethical landlords who raise rents beyond the legally permitted 10%.
California Attorney General Rob Bonta emphasized at a recent press conference, “It is unacceptable to exploit disaster victims by inflating prices.”
For instance, a modern three-bedroom condominium in a downtown LA high-rise that was listed for $5,500 a month in October reappeared this week on Zillow with an alarming new asking price of $8,500. However, that listing was taken down by Saturday.
The entire state has been grappling with the dual issues of rising housing costs and homelessness, recently making modest progress towards building more affordable housing.
Legally, are landlords permitted to raise rents?
California law explicitly forbids price-gouging following the declaration of an emergency, meaning landlords and businesses are not allowed to increase rent or service costs by more than 10% from their prices before the emergency was declared.
Engaging in price-gouging is viewed as a misdemeanor, which can result in up to a year of imprisonment and a $10,000 fine for each infraction.
Housing-related protections typically last for 30 days post-emergency declaration; however, Governor Gavin Newsom extended the moratorium on rent increases for hotels, motels, and rental housing until March 8.
Is there evidence supporting rent increases within Los Angeles?
Tenant rights groups and landlord associations have urged stringent enforcement against rent gouging, prompted by reports of exorbitant rental prices.
Social media users are collaboratively identifying instances of outrageous rent hikes, compiling their findings into a shared Google document.
For instance, a four-bedroom, four-bath residence in Encino that initially sought $12,000 a month in December was relisted in January for $14,000. In another case, a three-bedroom, four-bath property in LA went from $16,000 in September to a shocking $29,000 this week.
Both examples clearly exceed the 10% cap, and by Saturday, both postings were removed.
What kind of assistance does FEMA offer those in need of housing?
Individuals displaced due to the fires who have homeowners or renters insurance may be eligible for living expenses to cover hotel stays or rental accommodations.
The Federal Emergency Management Agency (FEMA) has multiple programs to assist displaced residents, which include funding short-term hotel and motel stays, as well as advance cash for housing through its rental assistance programs.
Moreover, FEMA reimburses out-of-pocket lodging expenses that insurance does not cover.
What mortgage relief options are available for homeowners?
On Saturday, Newsom’s office announced that five major banking institutions have agreed to extend mortgage relief for homeowners impacted by the fires. This includes a 90-day grace period for mortgage payments, a 90-day waiver of late fees, and a 60-to-90-day suspension on new foreclosures.
The banks cooperating in this initiative include Bank of America, Citi, JPMorgan Chase, U.S. Bank, and Wells Fargo.
Are housing platforms aiding in anti-gouging enforcement?
The short-term rental platform, Airbnb, informed hosts in Los Angeles and Ventura counties that attempting to raise prices above the 10% threshold will trigger an error message.
Additionally, the company is sending notifications to its hosts that price gouging during a state of emergency is illegal.
Zillow has also begun sharing “important information for renters during a state of emergency” regarding the applicable laws in the area’s rental listings.
