Price Gouging in the L.A. Housing Market Is Now Rampant. Can We Stop It?

The wildfires in Los Angeles are devastating. Forty thousand acres of natural and urban land have been scorched, more than 12,300 structures decimated, and tens of thousands of families lost their homes, pets, baby books, and most cherished possessions. The displaced are now fanning out, seeking temporary shelter with friends and family, in hotels, or in rental units. 

Many will have trouble finding a place to stay in a city that was already as many as 450,000 affordable units short before the fires. When there are more heads than beds, it’s a seller’s market. When there are more heads than beds in a crisis, it’s a gouger’s market. 

Cue the greedy landlords. In the past week, the price of rental units has skyrocketed. Tenants are inundating government and non-government agencies with complaints of price gouging, according to the Housing Rights Center. A review of Zillow listings by The New York Times found that rent prices in West Los Angeles have spiked from 15 percent to an “eye-popping 64 percent.” And residents have begun cataloging an ever-growing list of inexplicably large price spikes in a jaw-dropping Google Sheet, a veritable rogue’s gallery of tenant exploitation, broken down by street address. 

According to the list, a one bedroom townhome outside Jefferson Park jumped from $900 to $2,300. Another in downtown Los Angeles (one of the few listings that does allow pets) spiked from $1,095 to $3,200. A five-bed, five-bath near Brentwood Heights went from $12,000 to $15,000. When asked about the shocking rent hikes, an L.A.-area listing agent offered the most-commonly invoked defense of price gouging: it was just “supply and demand” at work. 

Unfortunately, this type of price gouging after natural disasters is all too common. Early in the pandemic, price gouging on masks, hand sanitizer, respirators, and clorox wipes was rampant. After Hurricane Harvey, a Texas attorney general reported an instance of gougers charging a whopping $99 for a case of water. This is why the majority of states — including California — have price gouging laws on the books. These laws are designed to protect consumers when the markets may be impacted by natural disasters, pandemics, or other disruptions, like supply chain shocks — but they are only as good as their enforcers. 

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Area residents are reporting price hikes that far exceed California’s 10-percent threshold for price gouging. Lawmakers must work quickly to crack down on these predators, and make an example of some of the worst offenders. It is good to see that California Governor Gavin Newsom has extended price gouging protections for rental housing through March, and that California Attorney General Rob Bonta has announced his office will be ramping up resources to investigate and prosecute offenders. 

Even if they act fast, it won’t be enough. Because the problem is bigger than the greedy landlords. The  private equity vultures have also descended on the Hollywood Hills, and begun sifting through the rubble, looking to see what they might be able to acquire in a fire sale. Real estate agents are calling for the city to suspend its new “mansion tax,” which applies to deals over $5 million, and last year raised $375 million for affordable housing — a duck call for investors and corporate landlords looking to expand their footprint in the rental market. In a letter, realtors argued, “Exempting developers from the transfer tax for five years will encourage them to purchase land from homeowners at reasonable prices and quickly rebuild these devastated communities.”

Suspending the mansion tax will starve the city of the resources it needs to rebuild the affordable housing units displaced families require. It is the opposite of what policymakers should do to meet this moment. Now is the perfect time to show Angelenos why they passed this legislation in the first place, using the proceeds to deliver affordable housing on an expedited timeline that matches the urgency of this crisis. Lawmakers can look to the recent successes of Executive Directive 1, which streamlined some permitting for affordable units, as a roadmap. And while residents wait for additional housing to come online, policymakers should extend price gouging protections to renters through at least the end of 2025, and prohibit application fees, credit check fees, and other junk fees that drive up the total cost of rent during this period as well. 

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Crises like natural disasters expose and widen the existing fault lines in our economy and our public policy. Rent gouging after a wildfire is galling, but the hard truth is that every day, across this country, tenants are exploited by a housing system that is failing them. Even before the wildfires, our country was facing a severe housing affordability crisis, driven in part by corporate landlords working to extract as much as they can from us and our neighbors.

The lack of affordable housing across the country, and in major metropolitan areas like Los Angeles in particular, leaves us vulnerable to the whims of landlords. Private equity’s deepening penetration into the residential real estate market only exacerbates this power imbalance. This dynamic shows no sign of abating as President Trump’s new nominee to run the Department of Housing and Urban Development extolled the virtues of private equity at his confirmation hearing this week.

If we want to stop the vultures from circling, we must build a housing system that can not only withstand dangerous weather, but also the dangers of an economy that makes a fair price for rent increasingly elusive. 

Lindsay Owens is Executive Director of Groundwork Collaborative and author for the forthcoming book, Gouged (Viking Penguin).