California Ag Charges First Real Estate Agent With Price Gouging After La Fires

The wildfires in the Los Angeles area — which are nearing 100% containment after much-needed rain arrived over the weekend — have reduced local housing supply and increased demand, especially for short-term rental options. And the emergency needs of Southern California residents who’ve been displaced have law enforcement officials on the lookout for those who seek to benefit financially by overcharging for homes.

California Attorney General Rob Bonta announced last week that criminal charges have been filed against a real estate agent who allegedly tried to price gouge a couple who lost their home in the Eaton fire. That blaze has consumed about 14,000 acres in the Altadena area north of LA.

The agent, Mike Kobeissi, who according to his website has been the top producing agent in La Canada Flintridge for 28 years, was charged on a misdemeanor count of price gouging. According to documents filed with the Los Angeles County Superior Court, Kobeissi “unlawfully raised the rental price” on a home and violated state law that was implemented as part of Gov. Gavin Newsom’s recent emergency order in response to the wildfires.

The California Department of Justice (DOJ) investigated the case after a complaint was filed earlier this month. The DOJ found that the couple in question had applied to rent a home, but after the application was submitted, they were told that the list price had gone up 38%. The couple chose not to rent the home after that. State law prohibits price increases of more than 10% on goods or services that were being sold prior to an emergency declaration going into effect.

“As I have said repeatedly, the price gouging must stop. Today, we are making good on our promise to hold price gougers accountable, with more to come,” Bonta said in a statement. “May this announcement serve as a stern warning to those who would seek to further victimize those who have lost everything. DOJ is aggressively and relentlessly pursuing those who are trying to make a quick buck off of someone else’s pain.”

Bonta said the DOJ is actively investigating other potential criminal acts in this realm. It has sent out 500 warning letters to date, with more to come, to “hotels and landlords who have been accused of price gouging.”

Those who violate California law regarding price gouging face maximum penalties of 12 months in prison and a $10,000 fine. They can also face civil penalties and restitution of up to $2,500 per violation.

Although an official number has yet to be tallied, it’s expected that tens of thousands of homes have been lost in the LA fires. Although the impacts vary by market, supply has shrunk in many neighborhoods and demand for rental housing options has skyrocketed.

Data from Altos Research shows that the LA metro area has a median home price of nearly $1.5 million, with much higher prices in affluent neighborhoods like Pacific Palisades that have been decimated by the fires. But inventory is rising and conditions favor sellers in many areas.

John Graff, the CEO of Ashby & Graff Real Estate in LA, recently told HousingWire that the search for temporary housing will be “problematic” even as many people seek to rebuild.

“The housing supply here — both rental and for purchase — is incredibly short and the prices are incredibly high as a result,” Graff said. “Obviously, there will be anti-gouging measures in place to prevent anything nefarious from going on, but the prices still are what they are.”