Some claim that despite accusations of price gouging, Los Angeles landlords are simply meeting the demands of wealthy, desperate individuals who are making outrageous bids to find a new residence.
Many people who have lost their homes and flats are frantically looking for places to rent after flames damaged an estimated 12,000 buildings throughout Los Angeles. Online real estate postings examined by MarketWatch seem to indicate that some landlords have raised rents in response to the soaring demand, given the dreadfully low supply.
A California rule that prohibits price hikes of more than 10% on necessities like food, petrol, and housing during a state of emergency may be broken by landlords who have just raised prices. Yet, since Governor Gavin Newsom declared a state of emergency on January 7, hundreds of listings in the city seem to be promoting rentals that have gone up by more than 10%.
People have been urged to report price gouging by officials, including California Attorney General Rob Bonta. In a post on X, Los Angeles Mayor Karen Bass stated, “We have no tolerance for it.” She also announced the implementation of a new mechanism for reporting “illegally hiked rents.”
Additionally, landlords who have suddenly increased rental fees in the past week are being named and shamed by tenant advocacy groups.
Los Angeles Tenants Union leader Chelsea Kirk told MarketWatch that she started searching for property listings with particularly high prices after Newsom proclaimed a state of emergency. In order to encourage others to contribute instances of alleged price gouging, she compiled links on a spreadsheet and shared them on social media.
More than 1,000 items with potentially unlawfully inflated rentals were displayed in the spreadsheet as of Wednesday. One example was a four-bedroom apartment in Pacific Palisades that was posted on January 13 for $18,500 a month; it had previously been listed for $8,900. Another was a three-bedroom apartment in Studio City that went up from $10,000 in August to $16,000 per month on January 9.
Kirk has been active in tenant organizing for eight years. “Landlords aren’t just going to hold back from raising rents and earning more money out of the goodness of their heart,” Kirk said. “They handle this as if it were a business. It’s not a haven for others. Therefore, I’m not shocked that we’re in this predicament.”
Additionally, some renters are raising their rates.
However, Kirk pointed out that another element is exacerbating the problem.
According to her, a large number of the homeowners escaping the flames come from affluent areas and have more money than the average renter in Los Angeles. They are also willing and able to pay exorbitant costs.
As of December, the median price of a home in Pacific Palisades, where fire has devastated some of the most precious homes in Southern California, was $4.7 million, according to Realtor.com. As of mid-January, the typical rent was $12,000, which was 538% higher than the national average. (Move Inc., a subsidiary of News Corp., operates Realtor.com; Dow Jones, the publisher of MarketWatch, is also a News Corp. subsidiary.)
Kirk added that some homeowners who have lost their houses may be able to pay more for a short-term rental since they have insurance that will assist them pay for temporary lodging.
Michelle Schwartz, a managing partner at the real estate agency Agency Los Angeles, stated, “We have had a supply issue for many years, and the demand of 10,000+ families has sent everything into a frenzy.”
“When you’re dealing with the highest-end communities, they are willing and can throw money at an opportunity to get their family settled until they figure out their next steps,” she stated. On a single property, we are receiving more than ten applications. This, of course, raises the cost.
Because of this, some landlords are having to make difficult decisions, Schwartz added. “How does a landlord decide which family to rent to when all qualifications are equal?” she asked. “It’s heartbreaking all around, but we simply don’t have enough of the type of housing these victims are wanting.”
Landlords and real estate brokers react
According to some real estate brokers who work with landlords, they are pricing properties at what they think is a reasonable price. Others claimed that claims of price gouging were the product of miscommunication.
However, after BourseWatch asked about the large increases on their listings, brokers and landlords reduced asking rates in two cases.
On January 10, a property listing in Pacific Palisades that was included into the price-gouging spreadsheet was up for sale, asking $49,500 per month. Less than a year had passed since the house was last advertised for $40,000 in May 2024. It was taken off in July and then resurfaced this month on Zillow (ZG), a website that displays rental properties. According to a Zillow official, the company is working to stop price gouging on its website.
BourseWatch was informed by the listing broker that the latest price hike was not the result of price gouging, but rather of the home being offered completely furnished after being marketed unfurnished in May. The broker also mentioned that the price was negotiable and that rents are higher at the beginning of the year and vary with the seasons.
The broker stated that the landlord will reduce the rent from $49,500 to $44,000 per month after BourseWatch brought attention to the fact that the listing was on the spreadsheet of the L.A. Tenants Union. (In fact, the price was reduced to $44,000.)
Another broker told BourseWatch that her listing, which was also on the Tenants Union’s spreadsheet and seemed to indicate a significant price increase, lacked crucial information.
On January 11, the home, located in Playa del Rey, approximately 40 minutes south of Pacific Palisades, went up for sale for $12,000 per month. The landlord was requesting $2,795 per month when a property at that address was last offered in October 2022.
The listing broker, who told MarketWatch that she believes “price gouging is horrible,” explained the approximately 330% price rise by pointing out that the property on the market today was a fully furnished three-bedroom apartment in the same building, whereas the one that was previously listed was a studio apartment. “People really need to do their research before they accuse people of something,” she stated. On January 13, the listing was taken down.
The broker for another property told MarketWatch that the rent had increased over almost two years and that the new figure reflected the fact that the flat was fully furnished. The property was offered for a rate of $25,000 as of January 14, which was 70% more than when it was last listed, in November 2023. “Real estate agents were perplexed as to whether the 10% cap on rent increases applied to properties listed within the last six months or within the last two years,” the broker continued, referring to the time frame covered by the price-gouging rule.
The broker also mentioned that some potential tenants are making offers higher than the quoted rent. “If people of free will are willing to pay more to beat the competition … what is a landlord or agent supposed to do?” replied the man.
On January 9, a different home was posted for $10,000, which was 33.3% more than the $7,500 rent that was listed for it in November 2024. The property owner asked why he couldn’t determine the price himself after learning about the 10% cap on rent increases. Later, he informed MarketWatch that he was still seeking for tenants and had lowered the rent to $9,000, a 20% rise from the November rental price.
Others, however, failed to provide an explanation for the significant rise in asking rents. As of January 12, the rent for one Beverly Hills house was $67,500, which was 133% more than the amount it had been asking for in October 2023. A request for response from the firm listing the property was not answered.
Los Angeles real estate lawyer Avi Sinai stated that while he is not shocked by the soaring rates, it will be difficult to hold landlords accountable for price gouging. “Renters are already offering above-asking bids for leases, just like we’d seen during COVID,” he stated.
According to Sinai, when a home receives 25 offers over the asking price, it’s simply the market reacting to the changing circumstances and not a case of price gouging. High-end residences are currently in high demand for leasing, which will drive up costs. Tenant groups are urging political officials to implement a moratorium on evictions and a rent freeze in the wake of the fires in order to safeguard vulnerable residents.
Some listings that have been off the market for months or even years are finally making a comeback, which is a bright spot amid the rental market upheaval. According to Sinai, some property owners who “swore off renting” are now coming back into the market, which may eventually benefit tenants by increasing the amount of available inventory.
What transpired when someone attempted to persuade landlords to reduce rent?
Zoe Weber warned brokers and landlords via text that they might be breaking state law by raising rents by more than 10%. She also sent a few examples of potential price gouging to the L.A. Tenants Union’s spreadsheet. She expressed her desire to have the rents reduced.
Weber told MarketWatch, “I’ve had mixed reactions,” working with a nonprofit organization that addresses homelessness and housing in Los Angeles. In response, several stated that they intended to reduce their asking rents and that they were unaware of the rule.
However, he responded by calling her a scammer after she wrote to one landlord to inform him that she had reported his listing to authorities for unlawful price gouging during a crisis.
