Combating Rent Gouging After L.A. Wildfires Proves a Long Game

In the months since wind-driven wildfires ravaged Los Angeles, the housing market there has struggled to restabilize. 

The largest of the two fires, the Palisades Fire in coastal Pacific Palisades and the Eaton Fire in inland Altadena, destroyed thousands of homes and buildings in both neighborhoods, displacing close to 13,000 households into a housing market already in crisis, according to the California Department of Forestry and Fire Protection (Cal Fire).

“Out of the gate it was crazy busy,” said residential broker David Berg of Compass, who has a client base in the Palisades. “We did 40 to 50 leases in a month or so, and we probably do that many leases in a year.”

Given the sudden surge in demand for housing from displaced families, California in early January implemented a state of emergency capping rental increases in an effort to prevent rent gouging. Initially implemented for 30 days, the state of emergency has been extended until July.

But, even as the fires continued to rage, listed rents for homes and apartments were rising far more than the allowed 10 percent. Some fringe cases’ asking rents were 50 percent more than what they’d been asking previously. 

In one fairly moderate example, a studio in South Pasadena that had been asking $2,630 in late December had its price hiked 18.4 percent to $3,120 on Jan. 10, according to Zillow. At the time, the Eaton Fire had already destroyed 5,000 structures and was just 3 percent contained, according to Cal Fire.

In response, a grassroots campaign emerged to track rental listings in violation of the rent-gouging moratorium. Nicknamed the Rent Brigade, the campaign took off via a shared spreadsheet posted by Chelsea Kirk, an economic researcher and tenant advocate, who asked people for examples of rent gouging. Worried Angelenos quickly used Zillow to spotlight listings that appeared to be taking advantage of an ongoing tragedy.

“The response was crazy,” said Lauren Harper of the Rent Brigade. “Hundreds of people were adding rent gouge units that they had found to this spreadsheet.”

By Jan. 18, while the fires had yet to be fully contained, the spreadsheet had 700 listings. A report by the Rent Brigade published in April that used data scraped from Zillow identified up to 10,000 units in violation of the rules. That sum equated to roughly 10 percent of the currently available units for rent. 

“It’s not just a problem for mansions in West L.A.,” said Harper. “It’s a problem that’s affecting units across the spectrum.”

Per the rules, any rental that was already on the market on Jan. 7, 2025 — the day the state of emergency was announced — or had been on the market within the previous year, could raise the rent up to 10 percent. Rentals without a recent benchmark were allowed to raise rent up to 160 percent of the fair-market rates set by the U.S. Department of Housing and Urban Development (HUD). The updated spreadsheet tracks both violations in both scenarios.

While the market rates set by HUD are designated by neighborhood and scale up per unit size, at the higher end of the market these caps are below what landlords could expect to charge, even prior to the fires. For example, a two-bedroom home in Venice Beach could be rented for a maximum of $5,010 and a three-bedroom for $5,550 — the highest possible maximum, but sums actually below what landlords might normally get.. 

“If you had a $15 million home, you could rent it for next to nothing,” said Berg. “You couldn’t even pay your property taxes.”

California Gov. Gavin Newsom did issue an executive order providing an exception for units with four bedrooms or more in certain neighborhoods, recognizing that the HUD limits were not in line with reality for larger homes. 

In fact, homes with at least three bedrooms are feeling the squeeze more so than smaller rentals, because they are in such short supply — and possibly because the families looking for housing were not the typical renters. Rents for single-family homes jumped 7.2 percent in February, based on newly leased rentals that month, according to an April report by data firm Cotality (previously CoreLogic).

“That’s a big jump in rent,” said Molly Boesel, the head economist at Cotality. “That tells us that displaced owners, who really want to stay in that area, they’re looking to go out and rent properties until they can figure out what to do. We saw similar movement after Hurricane Harvey in Houston.”

Prior to February, the rent for single-family homes increased at an average of 2 percent annually each month. The national average was 2.9 percent. 

Multifamily rentals, however, did not show evidence of a major surge. Rents In Los Angeles were up less than 1 percent since the beginning of the year, according to ApartmentList, but rents in neighborhoods near the fire zones rose between 1 and 3 percent. That includes Santa Monica, near the Palisades, where rents were up the most, as well as Pasadena, Glendale and Burbank near Altadena. 

Separate data from Realtor.com, which tracks the asking rent of one- and two-bedroom apartments, showed the median ask fell 2.8 percent year-over-year in March. 

Of course, many factors impact rent prices, not just illegal gouging. The even bigger problem is the lack of supply, which has taken a turn for the worse since property tax rates increased under the United to House LA (ULA) measure passed in 2023, according to Dave Rand, a land use lawyer in Los Angeles with Rand Nelson Pastor. The measure, also known as the “mansion tax,” levies an additional 4 percent tax on real estate transfers above $5.15 million, and an additional 5.5 percent tax on transactions above $10.3 million.

“The biggest topic of conversation in development, in real estate circles, when it comes to the city of L.A. is just how unbelievably detrimental Measure ULA has been to new development,” he said. “It’s been so bad that new applications [for development] have come to a grinding halt.”

And, while it’s not the only problem facing Los Angeles, it’s certainly high on the list.

“Obviously. there are macroeconomic headwinds that are not helping: high interest rates, high taxes and now tariffs,” said Rand. “It’s like the perfect storm of infeasibility.”

For those advocating for tenants hurt by rent gouging, it’s an egregious and unnecessary addition to L.A.’s already dire housing crisis. And while the rent caps are still in effect, the enforcement really isn’t, according to the Rent Brigade. Only nine people or companies have faced consequences for alleged rent gouging out of thousands of bad actors, per their April report.

“It’s happening everywhere. It’s happening all across Los Angeles city and county,” said Harper. “So anybody who’s looking for housing right now is being affected by rent gouging.”