Los Angeles wildfires are devastating. Forty thousand acres of natural and urban land burned, more than 12,300 buildings were destroyed, and tens of thousands of families lost their homes, pets, baby books, and most prized possessions. The displaced are now fanning out, seeking temporary shelter in hotels or rental units with friends and family.
Shortly before the fire, the city already had as many as 450,000 affordable housing units, and many people would have difficulty finding shelter. When there are more heads than beds, it’s a seller’s market. When there are more people than beds during a crisis, it's a fraudulent market.
Cue the greedy landlord. Prices for rental units have soared over the past week. Tenants have made numerous complaints about price gouging to government and non-government agencies, according to the Center for Housing Rights. Comments on Zillow listings new york times found that rent prices in West Los Angeles have soared from 15% to an “eye-popping 64%.” Residents have begun listing the ever-growing list of inexplicable price spikes in an eye-popping Google Sheet, a veritable gallery of rogues exploiting tenants, broken down by street address.
The price of a one-bedroom townhouse outside Jefferson Park jumped from $900 to $2,300, according to the listing. The price of another listing in downtown Los Angeles, one of the few that allows pets, jumped from $1,095 to $3,200. The price of a five-bed, five-bath home in the Brentwood Heights neighborhood increased from $12,000 to $15,000. When asked about alarming rent increases, one Los Angeles-area real estate agent offered the most common defense of price gouging: It's just "supply and demand" at work.
Unfortunately, this kind of price gouging after a natural disaster is all too common. Price gouging on masks, hand sanitizer, respirators and Clorox wipes was rampant early in the pandemic. After Hurricane Harvey, the Texas Attorney General reported a scam in which a case of water was priced as high as $99. That's why most states, including California, have anti-price gouging laws. These laws are designed to protect consumers when markets may be affected by natural disasters, pandemics, or other disruptions such as supply chain shocks, but their effectiveness depends on those who enforce them.
Residents in the area have reported price increases that far exceed California's 10 percent price gouging threshold. Lawmakers must act quickly to crack down on these predators and make examples of some of the worst offenders. Happily, California Governor Gavin Newsom extended price gouging protections for rental housing through March, and California Attorney General Rob Bonta announced that his office will Increase resources to investigate and prosecute offenders.
Even if they move quickly, it's not enough. Because the problem is bigger than greedy landlords. Private equity vultures have also descended on the Hollywood Hills and begun sifting through the rubble to see what they can get in a fire sale. Realtors are calling on the city to suspend a new "mansion tax," which applies to transactions worth more than $5 million and raised $375 million for affordable housing last year — for investors and businesses looking to expand their presence in the real estate market As far as landlords are concerned, this is nonsense. rental market. “Exempting developers from transfer taxes for five years will encourage them to purchase land from homeowners at a reasonable price and quickly rebuild these blighted communities,” the real estate agents said in a letter.
A moratorium on the mansion tax would starve the city of the resources it needs to rebuild the affordable housing needed for displaced families. This runs counter to what policymakers should be doing to prepare for this moment. Now is the perfect time to show Angelenos why they passed this legislation in the first place, using the proceeds to deliver affordable housing on an expedited timeline that matches the urgency of this crisis. Lawmakers can look to the recent success of Enforcement Directive No. 1, which streamlined some affordable housing permitting, as a road map. While residents wait for more housing to come online, policymakers should provide renters with price-gouging protections until at least the end of 2025 and ban application fees, credit check fees and other junk fees that drive up the overall cost of renting during that time. The same goes for periods.
Crises such as natural disasters expose and amplify existing fault lines in our economy and public policy. Post-wildfire rent gouging is infuriating, but the hard truth is that across the country, renters are being exploited every day by a housing system that fails them. Even before the wildfires, our country faced a severe housing affordability crisis, driven in part by corporate landlords trying to squeeze as much money as possible from us and our neighbors.
The lack of affordable housing across the country, especially in major metropolitan areas like Los Angeles, leaves us vulnerable to the whims of landlords. Private equity’s deeper penetration of the residential real estate market has only exacerbated this power imbalance. That dynamic shows no sign of abating, as President Trump's newly nominated secretary of Housing and Urban Development extolled the virtues of private equity during his confirmation hearing this week.
If we want to stop the buzzards from circling, we must build a housing system that can withstand not only dangerous weather, but also the dangers of an economy that makes fair rental prices increasingly elusive.
Lindsay Owens is executive director of the Groundwork Collaborative and author of the forthcoming book, Gouge (Vikings penguin).