LA fire victims fear new housing crisis

Michael Stork and his family survived a devastating wildfire.

Now they must face a daunting new challenge they hoped they would never experience again – the Los Angeles housing market.

After losing the Altadena home he owned in the Eaton fire, he was looking for a new place to rent, and was having little luck.

“What’s available is not good at all and rents have gone up a lot,” Mr Stork told the BBC. “I told my teenage daughter that we have to accept that we will live in a place that is not going to be very nice.”

The Los Angeles area is already one of the most expensive real estate markets in the country. And now with thousands of people displaced by the Palisades and Eaton fires, Angelenos are worried that the sudden increase in demand could push rents and home prices even higher.

California has an anti-price gouging law that prevents landlords from raising rents by more than 10% after the governor declares a state of emergency. This applies to both existing tenants and new leases.

Many buildings in Los Angeles County also fall under rent stabilization laws, which prevent landlords from raising rents for existing tenants above a certain percentage even under normal circumstances.

“It’s illegal. You can’t do that,” California Attorney General Rob Bonta said at a Saturday press conference. “This is an offense punishable with a jail term of up to one year and a fine.”

However, not everyone was certain that the law would be fully enforced.

“We know about it but my question is how is it being regulated? And who is monitoring it?” said Jessica Heredia, a Realtor who has lived in the high-end Brentwood neighborhood for the past 20 years.

He thought, if both landlord and prospective tenant come to a private agreement armed with enough cash, who will stop them?

Such an arrangement could lead to cost overruns between a tenant desperate for shelter and a landlord happy to work with the highest bidder.

According to real estate listing company Zillow, the average rent for all types of homes in downtown Los Angeles — whether single-family, apartment or townhome — was currently about $2,800.

The average rent for a two-bedroom apartment, a potentially tight squeeze for a family starting over after the wildfires, is $2,995, according to Zillow data.

But prices vary wildly and can be significantly higher in desirable neighborhoods near the ocean that offer climates and communities similar to Pacific Palisades.

In Los Angeles, land of movie star mansions, rents at the highest end of the market can reach five figures.

In Pasadena, the city next door to devastated Altadena, the average rent for all home types was $2,600, according to Zillow.

Other Altadena residents who lost their homes in the Eaton Fire were beginning to consider looking for a new home, and were already weary of the prospect.

Concern only grew as neighbors swapped anecdotal accounts of seeing listing prices rise, and local outlets shared reports of double-digit percentage jumps in individual rents.

Longtime residents of the area feared that this law would not be enough to help them.

Jennifer Nazarian, 52, completed a two-year renovation of her Altadena home late last year. The family celebrated Thanksgiving in the gleaming new kitchen. Now the house has been turned into a pile of smoldering debris.

When she and her husband began considering an insurance claim, she started talking to a real estate agent about finding a temporary place to live.

“We want to stay local and there’s not a lot available there,” she told the BBC as she waited to speak to the Federal Emergency Management Agency at a Pasadena emergency shelter.

He feared the rental market was about to get worse – possibly fueled by eager landlords and agents.

“Everyone will be like, OK, we want a bigger piece of the pie,” she said.

As mountain communities were burning, Los Angeles luxury realtors saw the housing market overheating.

Ms Heredia showed the BBC a database used by realtors to track fluctuations in rent prices.

This week saw a surge in many high-end listings; A home in Santa Monica promising “a private balcony overlooking the ocean,” which was listed back in September, suddenly jumped from $29,995 to $35,000 on January 10.

Ms Heredia said some people were realizing how competitive the rental market is and were opting to buy instead.

There are no laws preventing rising prices for buying a home, he said, and those with the means want to move quickly.

Another realtor told the BBC that she had also sent an email to clients in case anyone came forward and needed help with insurance issues.

The disappointment in the real estate industry was clearly visible on Monday.

Ms. Heredia and her colleagues at Coldwell Banker Realty had set up a tent outside an emergency center in Westwood, offering a booklet called “Navigating Life After Wildfire Displacement.”

However, a volunteer soon arrived there and asked them to leave.

“We just want to help,” Ms Heredia told the BBC. “Everyone is trying to find their way through it.”

For the wealthiest affected by the Palisades fire, buyers could pay millions in cash to secure a new home.

Yet there was a “tragic” misconception that all victims of the Palisades fire were wealthy, according to Pete Brown, a spokesman for area City Council member Tracy Parks.

He told the BBC that many Palisades fire victims had bought their homes decades ago, possibly for as little as $25,000.

“His property was in that house,” Mr Brown said.

These elderly homeowners were left with nothing, and they stood no chance in today’s market, where buying a home for less than a million dollars is considered one step short of a miracle.

Other longtime residents found themselves discouraged by the cold, hard math of financing a new home in such an expensive market.

Until a few days ago, Roya Lavasani lived with her husband and daughter in a Malibu condo building she bought in the 1980s. On Monday, she was seeking help at a shelter in Westwood after a multi-unit building burned down.

Ms Lavasani cried as she told the BBC she did not believe insurance would pay her enough to rebuild the complex, the price of which has risen sharply since she bought it.

They rented other units in the building, meaning the family not only lost housing, but also a portion of the income. And there was little chance that they could buy assets similar to what they owned at today’s rates.

After sleeping temporarily in their car, Ms. Lavasani’s family planned to rent a motor home for eight days. But he doesn’t know where they will go after that.