Rent Gouging Means Los Angeles Rents Are Going Up Hourly

Photo: Myung J. Chun/Los Angeles Times/Getty Images

Realtors Gita Vasseghi and Melea Avrach started hearing from clients looking for temporary housing as early as January 7, the day the Los Angeles fires began. Based on the East Side of the city, they quickly began helping friends, friends of friends, and desperate cold callers displaced from the massive Eaton fire in Altadena. But just as soon as they mobilized, something else started happening: Prices started going up. By the 8th, when tens of thousands of people had already been evacuated, a client sent them a Zillow listing for a little two-bedroom house priced at $3,800 a month, on the market unrented for 60 days before the fires, in a part of Altadena that did not burn. Within the hour, and by the time the agents were able to check it out for themselves, the price had almost doubled to $6,500. Vasseghi and Avrach were sure they could negotiate the original rate when they told the listing agent it was for clients who had just lost everything they owned. But when they called him, it became clear the price had gone up because of people like their clients. He said, simply, “Too many people want this house. You’ll have to be competitive.”

Within the week since Los Angeles’s worst-ever disaster began, rent gouging has become a crisis on top of the crisis. It’s against the law to increase a rental price by more than 10 percent once a state of emergency has been declared; this fact doesn’t seem to be worrying the agents jacking up the numbers on open listings to desperate Angelenos. That behavior can result in a fine or even jail time. But according to sites like Zillow, the gouging is rampant anyway. “People smell blood in the water,” Jeffrey Saad, another Compass agent, told me. No tax bracket is being spared. A two-bed lower-level apartment in Brentwood Heights went up 19 percent to $3,100 on January 12; a five-bed, five-bath nearby went from $12,000 to $15,000 on January 10. Jason Oppenheim, the Selling Sunset star, told BBC News on January 12 that even his clients were getting scalped. Some of the listings have gone up more than once, as the fires got worse, like a three-bed in Beverly Glen with a terrace that went from $12,000 on the 8th to $15,000 on the 13th. Saad has noticed the same: “I saw some agents increasing prices by the hour on Tuesday and Wednesday, as the fires got worse,” he says.

Straightforward, illegal gouging is not even the only problem. Nothing in California’s penal code prevents prospective tenants from offering more on a listing. And the bidding wars are accordingly raging. Especially on the West Side, where a greater population of wealthy evacuees and survivors displaced from the Palisades fire have more to spend. “Those people are coming in with Monopoly money,” one agent said, some with quotes from their insurance companies. “I was trying to get one client into a listing for $17,000,” Saad says. “By the end of the call, we were at $29,000, because that’s how much other people were willing to pay.”

Robin Walpert, a Realtor based in the Palisades for 30 years, has been working around the clock to house a list of dozens of displaced neighbors, friends, and friends of friends. “You go to a showing,” she told me, “and there is already a crying family on the stoop. Then two more show up.” (Many aren’t even going to showings — they’re applying to places sight unseen.) She found one listing for a family of four in Brentwood Park for $30,000 a month. Within hours, there were ten applicants. Someone offered $51,000. Then another went to $52K. Then came $53K, with two months up front in cash. The house finally went to someone willing to pay $56,000 and the first year up front in cash. Over half a million dollars. (Two days later, that house was in an evacuation zone.)

“It feels like Mouse Trap, or Mad Max,” one mom from Pacific Palisades says. “Go down one path and you get there and that way is blocked.” She, her husband, and their kids fled to a family member’s house on the 7th, as their home was burned to the ground. They figured finding a rental wouldn’t be a problem — they have assets worth over $10 million and are able to prove high income. In the days after the 7th, they were rejected from place after place after being outbid. “The price on a listing wasn’t even real. It was ‘How much is your client willing to pay?’” At another, the owners suddenly said they might have to move into their own listing when they had to evacuate their other home.

With the landscape so distorted by the high rollers and opportunists, many displaced by the Palisades fire don’t even stand a chance on the West Side. Walpert, the Palisades agent who moved to Venice a few years ago, has one group made up of three generations of the same family who all lost their home of 60 years. They can’t afford anything even close to the area. “Where are they competitive right now? Nowhere,” Walpert said. “Only the rich will afford to stay in town.” Agents are already seeing prices go up in the Valley, Orange County, and Santa Barbara.

But what’s even more alarming than the current gouging boom is the boom that’s yet to come. The incredibly tight and expensive housing market in L.A. was another tinderbox waiting to explode. And now it has. “In the long term, the real gouging is just going to be the market itself,” an agent who didn’t want to be named told me. “There is just going to be a new status quo. People who see their neighbors get $12,000 in rent for a house that used to get $8,000 are going to put theirs on the market for that price. And same with sales. What’s considered ‘fair market value’ is already changing, whether you like it or not.”

In the meantime, people are cashing in. Walpert was delighted when a friend of a friend reached out to say she could offer her three-bedroom house in Santa Monica to people in need and move in with her father in the interim. “That’s amazing,” Walpert said. “How much?” “Well,” the woman replied, “it would only make sense for us at $40,000.” The current market rate for a house like hers is around $10,000, according to Walpert. “I told her, ‘Gross,’ and she was immediately embarrassed. She replied, ‘Oh my gosh, I’m so sorry, I just thought that’s what everyone else was getting now.”

With additional reporting by Justine Harman.