L.A. Apartment Rents Will Surge in Wake of Wildfires

Analysts estimate rents could rise between 8 percent and 12 percent in due to the wildfires

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After damaging or destroying thousands of single-family homes and an unknown number of apartments throughout Los Angeles County this week, the consequences of the most destructive wildfires to ever hit California are expected to further worsen the state’s housing and affordability crises, and raise multifamily rental rates around the region.

The areas near and around the two biggest fires in the Pacific Palisades and in Altadena — each of which would be among the five worst fires in state history if taken alone — are expected to see the highest rent increases. But effects will surely extend into surrounding neighborhoods, as well.

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“Tripling of rent growth is absolutely possible,” due to the lack of housing in L.A., Selma Hepp, chief economist at CoreLogic, told MarketWatch.

Analysts at CoStar (CSGP) estimate rents could rise between 8 percent and 12 percent in the wake of the destructive fires. 

“It’s difficult to quantify,” Stuart Gabriel, director of UCLA’s Ziman Center for Real Estate, told the Los Angeles Times. “I don’t think anyone knows what the numbers are.”

In some cases, it can be immediate, despite state laws against landlord price gouging. Real estate agents in L.A. have reported seeing some asking rents jump 15 to 20 percent overnight this week.

Single-family households as well as multifamily developers will also have to compete for contractors in what was an already strained and arduous permitting system. A study from 2023, co-authored by Gabriel, showed it took almost five years to deliver multifamily units in L.A. proper due to the time-consuming approval process.

Firefighters are finally making progress on the Palisades and Eaton fires, according to reports Friday afternoon Pacific time, but thousands of acres are still burning, with small percentages of containment, according to the Duty Watch app. The fires taken together already make for one of the costliest tragedies in U.S. history with damage estimates surpassing $50 billion on Thursday, prior to additional fires breaking out.

Gregory Cornfield can be reached at gcornfield@commercialobserver.com.