Many homes are suddenly far more expensive than they were before the fires
Key takeaways
- Some housing providers are trying to take advantage of displaced families searching for housing by illegally raising rents, a practice known as price gouging.
- In most cases, it is illegal in California to raise rents or the prices of goods and services by more than 10% for at least 30 days after an emergency declaration.
- Anti-gouging rules kicked in on January 7th, when Governor Newsom declared a state of emergency, and were recently extended until March 8th.
After what may be the costliest wildfires in U.S. history, where nearly 15,000 homes were damaged or destroyed, tens of thousands of people are in need of housing. While some are staying with friends, relatives, or in hotels and emergency shelters, many are searching for a rental.
Unfortunately, some housing providers are trying to profit on this surge in demand by suddenly raising rents by thousands of dollars. This is known as price gouging. It is illegal, but increasingly common.
Learn how to identify and report this unethical practice and protect yourself from falling victim.
>> Stay up to date on the L.A. fires and housing market
Price gouging is illegal but on the rise in Los Angeles
Price gouging is illegal in California. California Penal Code Section 396 prohibits housing providers and other businesses from raising rent or the price of many goods and services by more than 10% following an emergency declaration. Listings and goods that only hit the market after a declaration is announced can be raised by up to 50% more. Gov. Newsom declared a state of emergency on January 7th, and recently extended it until March 8th.
Unfortunately, price gouging is widespread in Los Angeles. Thousands of listings across the city have seen monthly fees abruptly jump, sometimes more than doubling.
Price gouging is affecting all price brackets, but lower-income residents will undoubtedly have a harder time coping. Not everyone can afford to pay $4,000 for a rental that was listed for $2,000 before the fires (an illegal price hike). The market tends to favor wealthier displaced homeowners who are often willing to bid anything on a house or rental site unseen.
Illegal bidding wars are also rising
Because so many people are looking for rentals, demand is through the roof. Rental listings regularly receive multiple offers, which often leads to bidding wars.
Bidding wars on rental properties resulting in a price increase greater than 10% are prohibited under state law.
Home buyers are also facing bidding wars, although they are not illegal, even during an emergency. Recovery has started in Altadena and Pacific Palisades, but it could take years for homes to be rebuilt. So, many residents are evaluating whether to lease or buy something now. Nearby cities like Malibu and Santa Monica are a logical choice, but people are shopping all across the state.
How to protect yourself from price gouging in Los Angeles
Price gouging is happening in L.A., but there are ways to protect yourself and make sure you’re paying a fair price for a rental.
- Do your research: Compare rental prices between neighborhoods and properties to understand going rates.
- Inspect listings carefully: Look for red flags, such as sudden, drastic price increases or conflicting information about the property on online marketplaces.
- Ask questions: If something seems off, question landlords or property managers about unexpected fees or steep rent hikes.
- Report suspicious activity: If you suspect price gouging, report the violation to Los Angeles County and the California Attorney General.
- Don’t fall victim to real estate speculators, either. There are reports of developers soliciting fire victims and offering cash to buy their property far below market value. This is illegal until at least April 14. Report violations to the California Attorney General.
How to report price gouging in Los Angeles
We believe it is essential for housing providers to follow local laws, especially those protecting consumers from price gouging during and after natural disasters. Housing providers can learn more about their responsibilities here.
We encourage Los Angeles residents to report any suspected price gouging violations to local authorities and the California Attorney General. If you suspect a housing provider has illegally raised rent prices, keep communication records and receipts and file a report by following these steps:
The California government has responded swiftly to complaints and recently filed its first charges against gougers. Those violating the law can receive a fine of up to $10,000 and/or be sentenced to a year in county jail.
How Redfin and Rent. are helping displaced residents find housing
At Rent. and Redfin, we understand the urgent need for displaced residents to find short- and long-term housing and are focused on how we can help.
Redfin agents are helping our customers find housing. The team at Rent. is in touch with property managers and owners in its network who are offering special deals or short-term leasing options for displaced residents. We’ve launched a website to help displaced residents easily find these housing options.
We’ve also used our data to identify a set of listings that potentially violate the price gouging rule, and have brought that to the attention of the relevant property owners and managers and reminded them of the law and their legal responsibilities.
Resources for displaced Los Angeles residents
From temporary housing to mortgage and eviction relief, there are resources in place to support those affected by recent wildfires.
Lastly, make sure to take time to grieve and process with your community. Thousands of people have experienced an unimaginable tragedy, and it will take time to heal. One thing is for sure, though: Los Angeles will come back stronger.
This post first appeared on Redfin.com. To see the original, click here.