As the raging wildfires in Los Angeles have displaced tens of thousands of people, they're also exacerbating fears of not being able to afford a place to live in a part of the country that has endured a decades-long housing shortage.
As someone who lives in the neighboring town of Altadena, I've witnessed firsthand how L.A. residents scramble to file for federal assistance, gather essentials for everyday living and try to feel a semblance of normalcy and make sense of the devastation amid the chaos. On top of their stressors, price gouging is making the dire housing situation in Los Angeles County even worse.
Per California Gov. Gavin Newsom's executive order on Jan. 17, landlords cannot raise rental unit prices by more than 10% compared to what they were listing right before the state of emergency on January 7th. This comes from Penal Code Section 396, which prohibits price gouging on consumer goods, services and rent. The provision is in effect for at least 30 days and can be renewed.
Price gouging in rental market
That said, price gouging is running as rampant as the wildfires. Per a recent study by The Rent Brigade, between Jan. 7 and Jan. 18, 1,343 listings on Zillow look like they've violated the state's ban on price gouging. For new listings, on average landlords and rental agents are charging renters 315% of the Fair Market Rent, which is nearly double the legal limit.
"The reality is that price gouging is very hard to keep track of unless there is a record of the prices listed for a particular unit online," said Jacob Woocher, a tenant lawyer and organizer with the Los Angeles Center for Community and Action. "More generally, one cannot check for price gouging any more than one can check for exploitation and oppression; it is ubiquitous. As long as there are landlords, there will be price gouging."
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There have been instances of real estate agents charged with price gouging those impacted by the L.A. wildfires. California Attorney General Rob Bonta and the Department of Justice reported sending more than 650 warning letters to landlords and hotels in the state.
As Woocher explains, tenants and displaced families should keep in mind that the enforcement of price-gouging protections by those who are meant to do so — primarily the attorney general of California and local city and district attorneys — will almost certainly be lacking. "They may try to make an example out of a small number of the worst offenders, but this will be no more than a drop in the bucket," said Woocher.
Understanding your rights
If you live in Los Angeles County, you can check websites such as the Housing Rights Center, where you can look for information on what is legal and not legal regarding rent increases in your jurisdiction, said Chancela Al-Mansour, executive director of the HRC. This information can be found on the HRC's website and the County of Los Angeles. Plus, the City of Los Angeles and Pasadena have rent stabilization departments.
Organizations such as the Housing Rights Center and the LA County Department of Consumer and Business Affairs are accepting rent price gouging complaints. You can also file a complaint with the city or jurisdiction where you live. So if you've experienced or witnessed potential price gouging, filing a complaint is fair game.
If you're renting or were displaced due to the fires, you must be keen on your tenant rights
If you're a prospective tenant, Al-Mansour recommends researching to find out what the posted rent was before Jan. 7. On some real estate platforms, such as Zillow and Trulia, you can see any price changes and the price history of a rental. "That way, you could know whether or not the rent they're being quoted is more than what's allowable under the law," she said.
In other words, see if you can determine the rent before the fires. That could reveal the maximum rent the landlord or real estate agent can charge now, regardless of what was posted.
Preparing for renting after getting displaced
If you're renting or were displaced due to the fires, you must be keen on your tenant rights. Under Newsom's executive order, you cannot be evicted if you're a renter and are housing people who the fires have displaced. This protection is in place until at least March 3, and can potentially be renewed.
And if the home you're renting was built before 1978, it's protected under the Rent Stabilization Ordinance, which means that for many homes, rent cannot be raised more than 4%, and in some instances, no more than 6%.
Douglas A. Boneparth, a certified financial planner and founder of Bone Fide Wealth, explains that before signing a lease, always be sure to carefully review it for hidden fees or unfair clauses.
Financial steps for getting back on your feet
While you might be in a panic and scramble to find a new place to live, says Boneparth, it's important to figure out what's feasible within your budget.
A good place to start? Boneparth recommends calculating how much rent you can comfortably pay without dipping into savings that are intended for emergencies.
"Moving expenses can be surprisingly high — even if you're moving only a short distance"
That said, depending on the particulars of your situation, it might be hard not to clear your savings. This depends on whether you've lost everything in your fire or need to uproot for a period of time while your home undergoes the restoration or partial rebuild period.
Boneparth suggests not renting out of desperation. "The pressure to find a home quickly can be overwhelming—especially after losing your primary residence," he said.
Hit "pause" before you sign up for the first rental you come across. You'll want to factor in all the expenses, said Boneparth. "Rent is just the start," he said. "There are one-time costs such as the security deposit, application fees and potential broker fees. Moving expenses can be surprisingly high — even if you're moving only a short distance."
Moving expenses can depend on the size of the move, the time of year, the distance and the cost of your new rent, security deposit and other fees.
To explore funding options, go beyond your savings, says Bobeparth. See how much you can get from FEMA, friends, family and community-based resources. Also, wait for your payout from a homeowner's or renter's insurance claim.
And while you can tap into crowdfunding platforms such as GoFundMe, be careful that any money you receive from a GMF isn't deemed duplicate assistance. (Insurance payouts can also impact the amount of FEMA assistance you end up qualifying for.)
By familiarizing yourself with local tenant protection laws and planning as best as possible, you can help find yourself with sky-high rent far above everyday market prices.
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