In January 2023, fierce wildfires engulfed the Los Angeles area, forcing evacuations and devastating whole neighborhoods, particularly in regions like Pacific Palisades and Altadena.
These wildfires led to tragic losses; at least 30 lives were claimed, and over 10,000 homes were destroyed.
As the flames subsided, thousands of displaced residents faced a dire housing crisis.
Scouring platforms like Zillow and Airbnb, they found rental prices skyrocketing, with many property owners and real estate agents capitalizing on the urgent need for housing.
Dawn Smith, who had rented in Altadena for nearly a decade, was among the many impacted.
After losing her home in the Eaton Fire, she desperately searched for a rental at a price she could afford, only to discover options exceeding $10,000 per month.
This was three times her previous rent.
Eventually, she settled on a smaller unit in Sherman Oaks, situated over an hour away, for $7,800—still an astonishing amount.
While her renter’s insurance covered some of the difference temporarily, it would not sustain her family’s needs long-term.
As the end of her insurance coverage loomed, she found herself confronting the daunting task of determining their next steps.
“The prices were insane,” Smith shared, “but because we had to find somewhere, we rented.”
Post-disaster price-gouging has stirred up controversies nationwide.
States like New Jersey have pursued legal action against profiteers following Hurricane Sandy, and similar measures were seen in North Carolina and Florida after their respective disasters.
While many states enforce laws against price-gouging, enforcement is often lax amidst the chaos following disasters, with some economists arguing that such regulations can inadvertently lead to shortages.
However, housing represents a unique challenge.
Compared to overpaying for essentials like gasoline or water, committing to an inflated rental agreement can lead to severe financial repercussions such as eviction or bankruptcy.
Concerns regarding rental price-gouging have emerged repeatedly following devastating wildfires.
In California, the aftermath of the Camp Fire in 2018 and the Marshall Fire in 2021 raised similar alarms.
In one instance during the January wildfires, tech founder Edward Kushins and real estate agent Willie Baronet-Israel increased the rent of a Hermosa Beach property by 36%—more than $1,000—just two days after the fires ignited.
This incident occurred roughly 15 miles from the burn zone in Pacific Palisades.
California Attorney General Rob Bonta swiftly responded, launching a lawsuit against Kushins and Baronet-Israel for flouting a state law that restricts price increases on essential goods such as food and shelter during emergencies to no more than 10%.
If found guilty, they could face fines up to $10,000 and potential jail time of one year.
Yet, Kushins and Baronet-Israel’s listing represented just a fragment of a broader trend.
A Washington Post analysis indicated that average rent in the Los Angeles area surged by 20% in the weeks following the wildfires, effectively doubling the maximum increase permitted under California law.
Moreover, reports emerged indicating that Airbnb allowed users to breach legal limits on price adjustments across over 2,000 properties, failing to meet its commitment to prevent such practices.
This lack of enforcement in the aftermath of disasters isn’t new.
However, the overwhelming price-gouging incidents prompted an unprecedented push for stricter regulations regarding housing prices.
Advocates like Chelsea Kirk, aware of the alarming disregard for enforcement, voiced their concerns loudly.
Kirk, a tenant advocate, pointed out that inadequate enforcement sends a clear message to landlords: there are minimal risks associated with price hikes.
Across the United States, 36 states and the District of Columbia have enacted laws prohibiting merchants from engaging in price-gouging during emergencies.
Though California’s laws explicitly cap price increases at 10%, many states maintain vague and ambiguous definitions of what constitutes an ‘excessive’ or ‘unconscionable’ increase.
Teresa Murray, a leading consumer advocate at the Public Interest Research Group, emphasized the inconsistencies in these laws.
She noted that enforcement often fails simply because governments lack the resources to monitor every disaster’s aftermath.
Additionally, many affected individuals are not aware of their rights or how to report violations.
However, these issues take on even greater urgency amid a nationwide housing crisis.
Approximately half of American renters are classified as rent-burdened, meaning they allocate more than 30% of their income on rent, a situation exacerbated by catastrophic events like wildfires or hurricanes that decimate housing supply.
Research unveils a troubling trend: landlords frequently hike rental prices following natural disasters.
After the Camp Fire in 2018, asking rents in Paradise, California shot up by 25%; in Lahaina, Hawaii, rents surged by 44% following the 2023 Maui wildfires.
Moreover, even existing renter households suffered as over a quarter in Boulder experienced rental hikes exceeding 10% after the 2021 Marshall Fire.
Price increases, on average, observed around 5% following flood events, disproportionately harming low-income families who are then forced to relocate or cut vital expenses.
Blanca, a resident from Altadena, experienced the same distressing pattern.
The Eaton Fire took a toll on her business and caused severe damage to her apartment complex.
Even with their unit intact, the building lacked essential utilities like water, gas, and electricity.
As Blanca and her husband searched for alternative housing, all available options came with staggering price tags, far exceeding what they previously paid.
Lacking the financial means to meet these inflated demands, the couple returned to their unusable unit.
Forced to live in unsafe conditions for months, Blanca’s frustration was palpable.
“The place has not even been inspected, and many people have returned since February,” she shared in Spanish.
As the initial chaos from the fires began to settle, Attorney General Bonta initially attracted attention with reminders about the state’s price-gouging laws.
He emphasized that rental prices were not to exceed 160% of the standard market rate.
However, it soon became apparent that many property owners were either oblivious to or indifferent towards these regulations.
Thus far, Bonta’s office has dispatched over 750 warning letters regarding suspected gouging behavior yet only pursued four lawsuits without securing any convictions.
Although the city attorney’s office in Los Angeles has initiated action against certain offenders—including lawsuits against Airbnb—Los Angeles County’s district attorney has not taken any price-gouging cases to court.
Legal nonprofits working to aid victims face significant difficulties as they often rely on having a named plaintiff to initiate litigation, yet many disaster-affected individuals lack the understanding or resources to take such steps.
Rodney Leggett, director of litigation at the Housing Rights Center in Los Angeles, expressed dissatisfaction, noting the relative scarcity of formal complaints about price gouging received by his organization.
“We have gotten complaints of people seeing price gouging, [but] we have gotten relatively few … people saying, ‘I am actively being price gouged,’” he explained.
Lack of awareness and resources significantly hampers tracking and reporting of gouging incidents, leaving many victims vulnerable.
The rampant price-gouging following the L.A. wildfires, however, ignited urgent discussions on enhancing enforcement measures.
As housing advertisements flooded major real estate platforms like Zillow, a group of tenant advocates galvanized action, seeking to create a collective response to the prevalent gouging practices.
Kirk collaborated with fellow tenant advocate Lauren Harper to establish The Rent Brigade.
This initiative aimed to systematically track exorbitant rental listings by utilizing technology to scrape data from Zillow and compile evidence submitted by fire victims and community volunteers.
Within weeks of forming this coalition, over 1,500 instances of price gouging were cataloged.
Mike Nemeth, representing the California Apartment Association, contends that most landlords strive to comply with regulations.
He stated, “The California Apartment Association takes seriously the legal and ethical obligations of rental housing providers during declared emergencies.
Most housing providers want to do the right thing, and our role is to help them navigate complex rules when it matters most.”
Pressure from advocacy groups like The Rent Brigade eventually led local officials to enhance enforcement capabilities.
The Los Angeles County Board of Supervisors took action, voting to implement a new administrative system aimed at penalizing landlords found guilty of price gouging.
Under this new framework, local authorities could impose fines of up to $1,000 per violation each day, along with additional penalties for failing to comply with county investigations.
Jamie Court, president of the advocacy organization Consumer Watchdog, highlighted the importance of such measures, indicating they could serve as a vital deterrent against price gouging.
“This is desperately needed as a deterrent and to let people know that price gouging is not up to prosecutorial discretion,” he articulated.
While the provisions of Los Angeles County’s price-gouging laws will expire once the emergency declaration concludes, advocates hope this progress signals a change for future responses to housing crises following disasters.
The fire-related surge in housing demand may have receded, yet recent observations by Kirk and Harper revealed a troubling trend of landlords continuing to market properties at excessive rates.
Their investigation concluded that a constrained housing supply had normalized price gouging within the rental market.
Even outside of emergencies, property owners felt emboldened to raise rents, leaving tenants grappling with a deeply entrenched issue as they face volatile housing markets.
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