La Fires Upend Rental Market As Residents Scramble For Housing

Several fires burning more than 45 square miles in the Los Angeles area have forced more than 100,000 residents from their homes and killed five people, The Associated Press reported on Thursday. Nearly 2,000 homes, businesses and other structures have been destroyed, with many displaced residents scouting for rental properties and temporary shelter. 

Michael Nourmand, president of Beverly Hills-based Nourmand & Associates Realtors, said in an interview Wednesday with HousingWire that safety is the top priority.

“[We’re taking into account] whose properties have been burned down, who can we help house, and I think that the main thing now that is starting to become conversation, s what properties are available to lease for people that no longer have a habitable house anymore.”

On Tuesday, California Attorney General Rob Bonta issued a consumer alert following Gov. Gavin Newsom’s declaration of a state of emergency in response to the Palisades Fire in Los Angeles County. Bonta’s alert focused on illegal price gouging.

“California law generally prohibits charging a price that exceeds, by more than 10%, the price a seller charged for an item before a state or local declaration of emergency,“ the alert stated. “For items a seller only began selling after an emergency declaration, the law generally prohibits charging a price that exceeds the seller’s cost of the item by more than 50%. This law applies to those who sell food, emergency supplies, medical supplies, building materials, and gasoline.”

But those on the scene have already witnessed price gouging. Anthony Marguleas, founder of Amalfi Estates, lost his home and is actively searching for rentals in the LA area.

“’It’s substantially worse than anyone can imagine. I was out there for four hours yesterday walking because you can’t drive in. And it’s at least 50% of the homes and businesses have been decimated,” Marguleas said. “And it could even be higher. In many neighborhoods, it’s about 100% of the homes and businesses are just gone. We’re seeing several landlords have increased their rents by 50%.”

John Graff, a Los Angeles-based CEO of Ashby & Graff Real Estate, said that the search for temporary housing will be “problematic” as LA tries 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.”

Marguleas said that renters are facing as many issues as homeowners are.

“There’s a lot of renters who got displaced“ he said. “And there are situations where the renter will pay six months in advance or nine months in advance, and now the landlord has to reimburse, and if they don’t, there’s some problems. Yeah, we’re starting to see that as an issue as well.“

Marguleas, who said he had moved three times in a 36-hour period, bobbing between family homes and guest houses, said that he’s trying to find a temporary rental but has had no time to grieve over his destroyed home.

“The issue is, right now, we believe there are 2,000 to 3,000 people displaced, and there are only about 200 rentals available,” he explained. “So, my wife and I, we’re calling places, and they’re telling us that 100 people have called, and it’s only been 24 hours since they lost their homes.” 

Kevin Peranio, chief lending officer for Paramount Residential Mortgage Group (PRMG), lives in the Orange County area and said he’s witnessed the effects of being displaced by the wildfires. Peranio is also an investor in Pacaso, a second-home co-ownership company, and said that the company is mobilizing its network to help those in need.

“[A woman lost her home] in the Pacific Palisades and their Pacaso second home. … I happen to own a condo two hours away in Rancho Mirage, so I offered to let the lady who lost her home stay at that condo for a month or as long as she needed. She’s moving in this weekend,” Peranio said. 

Lindsay Brugger, vice president of urban resilience at the Urban Land Institute, said that as LA moves forward to rebuild, the region is unfortunately already struggling to provide affordable and attainable housing.

“There will absolutely be increased pressure on the housing market as we come out of the wildfires that we’re seeing now, and that will be particularly difficult for rental properties,” Brugger said. “As we look to the months ahead and begin to think about what recovery and rebuilding might look like, that is where we might want to start thinking about how our housing stock can be better prepared for future wildfires.”

Brugger referenced “building-scale wildfire mitigation strategies” and materials that are fire resistant. These include cementitious siding, metal roofs, asphalt shingles, concrete or clay roof tiles, and protected vents to keep embers from entering a home.

“Landscaping is a big one,“ she said. “Firewide standards can help to minimize the likelihood of vegetation being engulfed in a wildfire, so [ensuring] that there is a defensible space zone around the building where there’s no combustible material. Those are a couple of strategies that we’ve seen in other developments,” she said.