More than 15,000 people are helping to fight wildfires across Southern California.
The devastating forest fires that have hit the Los Angeles area in recent weeks have further squeezed an already tight housing market and fueled a rise in rents, raising concerns about pricing.
Authorities said more than 12,000 structures were destroyed Los Angeles area fires that hit Pacific Palisades and Altadena, as well as the Malibu area. At least 27 people have been killed in wildfires that continue to pose a threat as firefighters work to contain the blazes, which have been fueled by Santa Ana winds.
With the fires destroying a significant number of homes in these areas and many people in the region still under evacuation orders due to the dynamic nature of the fires, area residents looking for rental housing options are seeing dramatic price increases compared to the market a year before the fires.
“The fires have had a profound and far-reaching impact on the Los Angeles housing market,” David Berg, founding partner of Smith & Berg Property Group, told Compass to FOX Business. “Entire neighborhoods have been devastated, displacing homeowners and putting enormous pressure on already limited housing inventory. Families who have lost their homes are urgently looking for rentals, which is driving demand in surrounding communities.”
A view of a fire-ravaged beachfront property overlooking the Pacific Ocean that burned as a result of the Palisades Fire in Malibu, California on January 12, 2025. (FREDERIC J. BROWN/AFP via Getty Images/Getty Images)
Daryl Fairweather, chief economist at Redfin, echoed this sentiment, telling FOX Business that not only those currently seeking rental housing see higher rents, but “people whose leases are about to end may get rent increases they didn't anticipate.” Fairweather added that some residents are looking to rent as far away as Santa Barbara because of the high demand closer to the fire zones.
Joel Berner, chief economist at Realtor.com, told FOX Business that from Jan. 4 to Jan. 11, there were several zip codes near the fire areas that saw significant jumps in rent prices after the fires. The 90403 zip code, which he said is in Santa Monica southwest of the Palisades Fire, saw rents increase by 33.9%. Another ZIP code in Santa Monica, 90404, saw a 23% increase in rents, while 91125 in central Pasadena also saw a 20% increase in rents over the period.
Berner noted that the data is still “noisy” because rents in other parts of LA have been falling week-over-week, and that once a full week of post-fire data is available, it may be easier to see the full effect of the rental market. impact
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A view of damaged structures and homes caused by the Palisades fires in the Pacific Palisades neighborhood of Los Angeles on January 11, 2025. (Axelle/Bauer-Griffin/GC Images/Getty Images)
California law limits emergency-declared price increases to 10% of the pre-emergency price, and Attorney General Rob Bonta emphasized at a recent news conference that the rule against price increases applies to housing and rentals.
Zillow, the real estate marketplace that includes rental offerstold FOX Business that it would “take action to help address declining rental listings in the affected areas appearing on our platform” by “activating our internal systems that flag potential violations and removing price-inflated listings, which exceeds the emergency threshold. .”
“If renters see a potential violation, we encourage them to report the listing to Zillow and the California authorities. We believe it is essential that housing providers comply with local housing codes, including consumer protections from price gouging during and after a natural disaster, and we provide resources that help them understand their responsibilities,” a Zillow spokesperson continued in a statement.
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Destroyed homes along the Pacific Ocean after the Palisades fire in Malibu on Wednesday, Jan. 15, 2025. (Eric Thayer/Bloomberg via Getty Images/Getty Images)
Stuart Gabriel, professor of finance and director of UCLA's Ziman Center for Real Estate, told FOX Business that while homes in fire zones were generally relatively valuable, some residents may be older or on more modest incomes than their wealthier neighbors because some homes they are six or seven decades old. This could present problems when they are about to restore.
“You have to separate the value of the home from the occupants, and in the case of homes built in the 1950s and 1960s, the owners clearly have wealth in the form of owning their own homes – but they may not be otherwise high-income households. In fact, they may be households with modest incomes and they can be older households in many cases,” he explained.
“So it's not at all clear that these households have the means or even the financial capacity to take out the necessary loans and engage in a recovery process that will be difficult and complex, take time and take enormous energy,” he added. added.
Chimneys stand among debris after the Palisades Fire passed through in Pacific Palisades, California on January 8, 2025. (AGUSTIN PAULLIER/AFP via Getty Images/Getty Images)
Gabriel noted that state and local authorities are trying to speed up the rebuilding of similar structures on land affected by the fire, but added that there will likely be changes in building density, use of fire-resistant materials, different landscaping. and other changes in infrastructure address the risk of fire.
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“There's going to be a redevelopment of these neighborhoods. It can't happen — these neighborhoods are too valued, too valued. But it's going to take time for the equipment to be replaced and relocated and for these communities to return to a new balance,” Gabriel said.
