The L.A. wildfires will cause a sharp increase in rental housing prices, prompting fears of price increases.

Devastating wildfires in the Los Angeles area in recent weeks have dampened an already tight housing market and raised rents, raising fears of inflation.

Officials say more than 12,000 structures have been destroyed by the wildfires in the Los Angeles area, which affected Pacific Palisades and Altadena as well as the Malibu area. At least 27 people have been killed in wildfires that broke out as firefighters worked to contain the blaze, fueled by Santa Ana winds.

With the fires destroying a large number of homes in those areas and many people in the region still being ordered to evacuate due to the volatility of the wildfires, local residents looking for an alternative to rental housing are increasing dramatically compared to pre-market rates. A fire broke out.

“The wildfires have had a significant and widespread impact on the housing market in Los Angeles,” David Berg, founding partner of Smith & Berg Property Group Compass, told FOX Business. “Entire neighborhoods have been destroyed, displacing homeowners and putting enormous pressure on the already limited housing stock. Families who have lost their homes are in desperate need of nearby communities and are looking for urgent rentals.”

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Daryl Fairweather, chief economist at Redfin, echoed this sentiment in a statement to FOX Business, saying that not only are renters currently seeing higher rents, but “those whose leases are about to end may experience unexpected rent increases.” Fairweather added that some residents are looking to rent as far away as Santa Barbara because of the high demand near fire zones.

Joel Berner, chief economist at Realtor.com, told FOX Business in an interview that there were several zip codes in the fire areas that saw a significant jump in rents between Jan. 4 and Jan. 11 after the fires. He noted that the 90403 ZIP code in Santa Monica, southwest of the Palisades Fire, saw a 33.9 percent increase in rents. Another Santa Monica ZIP code, 90404, saw rents increase by 23 percent, while central Pasadena’s 91125 ZIP code saw a 20 percent increase in rents over the same period.

Berner said the data is still “noisy” when other parts of LA see rents falling over a week, and once the data is available a full week after the fire, it may be easier to see the full effect of the rental market. Influence.

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California’s state law has increased the rate increase to 10% of the rate hikes declared in the state of emergency, and Attorney General Rob Bonta emphasized in a recent press release that the anti-price gouging rule applies to housing and rentals.

Zillow, a real estate marketplace that includes rental listings, told FOX Business that it is “taking steps to address price inflation in rental listings in affected areas appearing on our platform” by “marking our internal systems for potential violations and removing listings” with price increases above emergency limits.

“If renters see a potential violation, we encourage them to report the details to Zillow and California officials. We believe it is important for housing providers to follow local housing laws, including consumer protections, to protect against price inflation during and after a natural disaster,” a Zillow spokesperson continued.

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Stuart Gabriel, professor of finance and director of UCLA’s Zeeman Center for Real Estate, told Fox Business in an interview that while homes in fire zones are generally more valuable, some of the residents may be older or have more modest incomes. Some of the residences are six or seven decades old because of the more affluent neighbors. That can pose challenges when trying to rebuild.

“You have to separate the value of the home from the occupants, and in homes built in the 1950s and 1960s, obviously, the owners have wealth in the form of home equity—but they may not otherwise be high-income families. In fact, they may be very modest-income families and for the most part Cases can be older families,” he explained.

“So it’s not at all clear whether these households have the ability or financial capacity to break the loans they need and engage in the difficult and complex and somewhat time-consuming and labor-intensive rebuilding process,” he said. added.

Gabriel said state and local officials are looking to fast-track the reconstruction of similar structures in fire-ravaged areas, but with the density of buildings, the use of fire-resistant materials, and various changes in terrain, he said. and other infrastructure changes to Fire address.

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“The rebuilding of these neighborhoods will happen. It can’t happen – these neighborhoods are very expensive, their prices are high. But it will take time to replace and relocate facilities and these communities will return to a new balance,” Gabriel said.