Most of the homes lost are single-family homes, and their loss will unleash a wave of new renters onto a city already burdened by a housing crisis.
LA City Council Members Call For Eviction, Rent Hike Moratorium As Price-Gouging Reports Emerge
Los Angeles City Council members introduced a motion during a meeting Tuesday that would prevent landlords from raising rents or evicting people impacted by fires that have blazed across the area for a week.
The motion by Council members Eunisses Hernandez and Hugo Soto-Martínez would restrict rent hikes for one year. The proposal could help counteract a spate of illegal rent hikes that have surfaced despite an anti-price-gouging law that passed in 2018.
An estimated 12,000 structures have burned since the Palisades and Eaton fires — along with some smaller counterparts — broke out a week ago. Most of them are single-family homes, and their loss will unleash a wave of new renters onto a city already burdened by a housing crisis.
“The wildfires are still burning and the scale of the devastation is mounting with each day,” Hernandez said in a statement Tuesday. “Los Angeles is already in the midst of a housing and homelessness crisis–we cannot allow bad actors to take advantage of this catastrophe by price-gouging working class tenants. If we don’t take immediate action, we will see a second wave of disaster as rents and evictions skyrocket in a market that is already one of the least affordable in the nation.”
While many of the homes destroyed were upscale and owned by wealthy people, demand-driven cost increases are expected to impact renters in lower income brackets. This likelihood, combined with price-gouging, factored into the council members’ motivation for bringing the motion.
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“It’s an unfortunate reality that people will try to use this crisis to raise rents, evict low-income tenants, and take advantage of this horrific situation in pursuit of profit,” Soto-Martínez said in a statement. “We need to prevent as much of the secondary devastation as possible by urgently instituting an eviction moratorium and pause on rent hikes.”
A list of possible instances of price-gouging compiled by Los Angeles Tenant Union member Chelsea Kirk totaled 600 submissions after just two days. An army of volunteers are working to verify those submissions and report wrongdoing to local authorities. Most of the listings collected by Kirk and her cohorts are single-family home rentals rather than multifamily properties.
The law forbids landlords from raising rents by more than 10% in emergency situations, but enforcement relies on tenants and their advocates reporting the practice to authorities, who allow some bad actors to slip through the cracks.
The Los Angeles County Department of Consumer and Business Affairs, the central reporting and investigative agency for price-gouging in Los Angeles County, received approximately 200 complaints of price-gouging since the fires began, with most related to excessive increases on rental housing.
The investment market believes the damages will strengthen the hands of existing property owners, or at least it did before Tuesday’s proposal. On Sunday, a pair of REITs with significant exposure to the greater Los Angeles rental market received positive responses from investors.
Douglas Emmett, an office and multifamily REIT that controls nearly 4,500 apartments in Los Angeles and Honolulu, earned an upgrade from Piper Sandler analyst Alexander Goldfarb, who pegged the owner as a long-term beneficiary of rebuilding efforts.
All of the REIT’s 10 multifamily properties in LA sit in the Westside, including in Santa Monica and Brentwood, which have faced significant fire threats and evacuation orders.
A note from Goldfarb stressed “elevated demand” for West LA apartments, offices and warehouses for the next few years.
Essex Property Trust, which owns more than 11,000 units across Los Angeles County as well as significant properties across greater Southern California, also attracted attention from investors. BMO Capital analyst John Kim wrote that the wildfires will boost multifamily demand, noting 0.7% of the residential supply in LA had been destroyed as of Sunday and “displaced residents will likely translate to increased multifamily demand, ahead of peak leasing season.”
He predicts the REIT’s financial occupancy will jump more than 60 basis points sequentially in the first quarter due to increased activity in Los Angeles and Orange counties.
The LA Tenants Union and other tenant and antipoverty advocacy groups called on officials before Tuesday’s meeting to enact an eviction moratorium and freeze rents, as they did during the early days of the pandemic.
Goldfarb said such an action could only further drive institutional capital out of Los Angeles. Investors have hesitated to spend money on Los Angeles multifamily since the pandemic, put off by outmigration from the area and Measure ULA, the city’s transfer tax.
Daniel Yukelson, CEO of the Apartment Association of Greater Los Angeles, pushed back against the idea of bringing back Covid-era policies when reached by Bisnow Tuesday afternoon.
“While all of us are dealing with trying to provide assistance during this emergency, to now take such drastic actions by re-instituting COVID-era emergency rent freezes and eviction moratoriums would be counterproductive and merely dissuade housing providers from making their rental units available,” Yukelson said via email.
Instead, he advocated for cooperation among agencies and residents and highlighted concessions landlords can make.
“In the face of such tragic loss and current emergency conditions, all facets of our community are trying to come together and support one another,” he said. “Housing providers are seeking to help the members of our local communities who have been displaced by wildfires by providing much needed shelter, with many offering incentives and discounts, no security deposit requirements and also free application processing and credit screening.”
Source: Bisnow
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