Amid the devastating firestorms sweeping through Los Angeles, California officials are taking stern measures to prevent price gouging in the region's beleaguered housing market. Governor Gavin Newsom has extended prohibitions on price increases for motel, hotel, and rental housing until March 8. This action underscores the state's commitment to maintaining fair housing practices in the wake of the disaster that has displaced tens of thousands of residents.
Under California law, individuals and businesses are prohibited from increasing the price of goods and services, such as gas or rentals, by more than 10% after an emergency declaration. This 10% cap is in effect for 30 days following the declaration. Violating this law constitutes a misdemeanor, punishable by up to a year in jail and a $10,000 fine for each infraction.
In response to the crisis, five major banks—Bank of America, Citi, JPMorgan Chase, U.S. Bank, and Wells Fargo—have agreed to provide mortgage relief to affected homeowners. This relief includes a 90-day grace period on mortgage payments, a 90-day waiver of late fees, and a 60- to 90-day moratorium on new foreclosures. Furthermore, the Federal Emergency Management Agency (FEMA) offers several programs to aid displaced residents, including reimbursement for out-of-pocket lodging expenses not covered by insurance.
Airbnb has also taken steps to support fair pricing by implementing error messages when hosts in Los Angeles and Ventura counties attempt to raise prices by more than 10%. Despite these measures, some rental properties have been listed at prices that exceed the legal cap. A downtown LA three-bedroom condo was re-listed at $8,500, a significant jump from its original $5,500 monthly rate. Similarly, a house in Encino saw a price increase from $12,000 to $14,000 per month, and another property in LA from $16,000 to $29,000.
California Attorney General Rob Bonta emphasized the illegality of accepting rent exceeding the cap, even if higher offers are made. He stated:
"You cannot jack up prices and take advantage of disaster victims, plain and simple." – California Attorney General Rob Bonta
Elected leaders continue to issue warnings against price gouging and urge the public to report unethical practices. Social media users have begun crowd-sourcing examples of excessive rent increases, compiling their findings into a shared Google document.
