More than 15,000 people are participating in firefighting efforts across Southern California.
The devastating wildfires that have ravaged the Los Angeles area in recent weeks have further constrained an already tight housing market, spurring rental prices to rise and raising concerns about price gouging.
More than 12,000 structures have been destroyed by wildfires in the Los Angeles area, including the Pacific Palisades, Altadena and Malibu, authorities said. At least 27 people have been killed in the wildfires, which remain a threat as firefighters work to extinguish blazes caused by Santa Ana winds.
With fires destroying a significant number of homes in these areas and many people in the area still under evacuation orders due to the dynamic nature of wildfires, area residents looking for rental housing options may We are witnessing a significant increase in prices compared to the previous market. A fire broke out.
“The wildfires have had a profound and widespread impact on the Los Angeles housing market,” Compass’ David Berg, founding partner of Smith & Berg Property Group, told FOX Business. “Entire neighborhoods have been destroyed and homeowners have been evicted, putting enormous pressure on an already limited housing stock. Families who have lost their homes are urgently looking for rental properties, and neighborhoods are Demand is increasing.”
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A view of a fire-ravaged beach property overlooking the Pacific Ocean as a result of the Palisades Fire on January 12, 2025 in Malibu, California. (Frederick J. Brown/AFP via Getty Images/Getty Images)
Darryl Fairweather, Redfin’s chief economist, echoed similar sentiments, telling FOX Business that not only are people currently looking for a rental home paying higher rents, but “those whose leases are about to expire are facing higher rents. “You may receive an unexpected rent increase,” he said. Fairweather added that some residents are looking for rental properties as far away as Santa Barbara because demand is higher closer to fire protection zones.
Joel Varner, senior economist at Realtor.com, said in an interview on FOX Business that from January 4 to January 11, there were several ZIP codes near the fire area that saw a noticeable increase in rental prices after the fires. He said he was seen. The 90403 zip code he described is in Santa Monica, southwest of the Palisades fire, and rents have increased 33.9%. Another ZIP code in Santa Monica, 90404, saw rents increase by 23%, and ZIP code 91125 in downtown Pasadena also saw rents increase by 20% during this period.
Varner noted that the data is still “noisy” as rents are down week-over-week in other areas of Los Angeles, and that once a full week’s worth of post-fire data is available, a complete picture of the rental market. It may be easier to confirm the impact, he said. impact.
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Buildings and homes damaged by the Palisades Wildfire in the Pacific Palisades area of Los Angeles on January 11, 2025. (Axel/Bauer Griffin/GC Images/Getty Images)
California law limits price increases after a state of emergency to 10% of pre-emergency prices, and Attorney General Rob Bonta said at a recent press conference that the anti-price gouging rule also applies to housing and rentals. he emphasized.
Zillow, a real estate marketplace that includes rental listings, told FOX Business it is “taking steps to address price gouging for rental properties in affected areas that appear on our platform.” , “activates internal systems to alert of potential violations and remove the property” with price increases above emergency thresholds. ”
“If a renter discovers potential violations, we encourage them to report the property to Zillow and California authorities. “We believe it is essential for people to follow local housing regulations, and we provide resources to help them understand their responsibilities,” the Zillow spokesperson’s statement continued.
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Homes along the Pacific Ocean are destroyed after the Palisades Fire in Malibu on Wednesday, January 15, 2025. (Eric Thayer/Bloomberg via Getty Images/Getty Images)
Stuart Gabriel, professor of finance and director of the UCLA Ziman Center for Real Estate, said in an interview with FOX Business that while homes in fire zones are generally very valuable, some residents are older or have modest incomes. He said there might be some people. Some of the homes were built 60 or 70 years ago and have wealthier neighbors. That could pose challenges for rebuilding.
“We need to separate the value of the home from the occupants. In the case of homes built in the 1950s and 1960s, clearly the owners have wealth in the form of home equity, but otherwise high-income They may not be households. In fact, they may be households with fairly modest incomes, and often elderly households,” he explained.
“Therefore, it is far from clear that these households have the resources and financial capacity to forfeit the necessary loans and undertake a difficult, complex, time-consuming and energy-intensive rebuilding process,” he said. Ta. Added.
A chimney stands amidst rubble after the Palisades Fire passes through on January 8, 2025 in Pacific Palisades, California. (Agustin Pourier/AFP via Getty Images/Getty Images)
Gabriel noted that state and local officials are aiming to expedite the rebuilding of similar buildings on fire-affected sites, but in terms of building density, use of fire-resistant materials and differences in landscaping. He added that changes are likely to occur. Other infrastructure changes to address fire risks.
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“The rebuilding of these neighborhoods will happen. There’s no reason it won’t happen. These neighborhoods are too cherished and too cherished. But as amenities are replaced and relocated and these communities It will take time to return to a new state of equilibrium,” Gabriel said.
