A recent report demonstrates how some landlords and real estate agents raised rents beyond legal limits to capitalize on the Palisades and Eaton wildfires, which have destroyed more than 5,000 homes and displaced thousands of individuals in Los Angeles County.
California Governor Gavin Newsom declared a one-year state of emergency in response to the wildfires on January 7, 2025, which activated anti-rent gouging laws that limit rent increases while the emergency declaration is in place. The report by the Rent Brigade – a collective of Los Angeles-based tenant organizers, advocates, researchers, and others – found that 1,343 distinct instances of rent gouging had occurred within the first 11 days of the state of emergency, or an average of 120 new rent-gouged listings per day. Illegal rent gouging makes it even more difficult for lower-income people to obtain safe and stable housing after being displaced by a disaster.
Under the state of emergency, rent increases are capped at 10% of the actual or advertised rent for properties that have been rented or listed for rent in the past year, respectively. For newly listed rentals and rentals not listed within the past year (“relisted”), rent prices are capped at 160% of the Fair Market Rent (FMR) set by the U.S. Department of Housing and Urban Development (HUD) for the listing’s ZIP code. The law includes minor variations on these rules for furnished rentals and short-term rentals, like hotels and Airbnb. The report identifies “rent gouging” as any increase that illegally exceeds the state of emergency limitations. Landlords who violate these anti-rent gouging rules can receive fines up to $10,000 and up to one year in jail.
The authors used data scraping methods to extract data from Zillow.com on rental listings within Los Angeles County that were updated between January 7 and January 18, 2025. The authors reviewed individual pricing histories to determine whether the 10% or the FMR rule applied to each listing and calculated legal rent ceilings accordingly, which they then used to identify rent-gouged listings. They caution that the validity of their approach is limited by their use of listings only from Zillow.com, as well as by the accuracy of these listings.
Of listings updated in the 11 days following the emergency declaration, 15% (1,343) were rent-gouged listings. Two-thirds (901) of rent-gouged listings were new or relisted, and thus subject to the 160% FMR rule. On average, these listings were priced at 315% of FMR, almost double what is allowed by law. One-third of rent-gouged listings (442) were pre-existing listings subject to the 10% rent increase cap; rents increased by 29% on average for these listings. Relative price increases for rent-gouged properties were higher for less expensive properties than more expensive ones, with listings in the bottom 25th percentile of rents increasing 46% and listings in the top 25th percentile increasing by 28%. Thirty percent (133) of the 442 pre-existing rent-gouged listings were listed below FMR prior to the emergency declaration, meaning they were likely more affordable to lower-income renters before rent increases.
Rent gouging occurred for rental properties of all sizes. For example, among rent-gouged studio units, the average peak rent post-emergency was $2,964, compared to an average price of $1,883 before the emergency – a 57% increase. Among rent-gouged two-bedroom units, the average peak rent post-emergency was $6,852, an increase of 80% from the pre-emergency average of $3,786 and 147% higher than the two-bedroom FMR for Los Angeles County ($2,771).
Between January 7 and January 18, the authors report that rent gouging escalated quickly and few listings were found to have reversed course to comply with the law. The number of rent-gouged listings increased by over 5,000% within the 11-day study period, with an average of 120 new instances of rent-gouging each day. In total, these rent-gouged listings exceed the legal limit of rent increases by $7.7 million dollars per month, or $92.4 million per year. At the time the report was released, only 9%, or 126 rent-gouged listings, had been adjusted to comply with the law.
The authors conclude that rent gouging practices are exacerbating an already acute affordable housing crises in Los Angeles and are exploiting vulnerable, displaced individuals. They call for clear legal guidance from state and local leaders to prevent misinterpretation of rent cap protections and swift enforcement to hold violators accountable. They also call for tenant protections including rent freezes and eviction moratoriums to keep renters stably housed during the state of emergency, and blanket bans on short-term rentals such as Airbnb to increase the rental housing stock.
Read the report at: https://bit.ly/40B3MEw