The devastating forest fires that have hit the Los Angeles area in recent weeks have further tightened an already tight housing market, causing a spike in rental prices that has fueled concerns about rising prices.

Authorities have said more than 12,000 structures have been destroyed los angeles wildfires in the area, which have affected Pacific Palisades and Altadena, as well as the Malibu area. At least 27 people have died in the wildfires, which continue to pose a threat as firefighters work to contain flames fanned by Santa Ana winds.

With the fires destroying a significant number of homes in these areas and many people in the region still subject to evacuation orders due to the dynamic nature of wildfires, area residents looking for rental housing options they see prices increase dramatically compared to the market before the fires broke out.

“The wildfires have had a profound and far-reaching 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 devastated, displacing homeowners and putting immense pressure on the already limited housing inventory. Families who lost their homes are urgently looking for a rental, driving demand in nearby communities.”

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A view of fire-ravaged beach property overlooking the Pacific Ocean that burned as a result of the Palisades Fire in Malibu, California on January 12, 2025. (FREDERIC J. BROWN/AFP via Getty Images/Getty Images)

Daryl Fairweather, chief economist at Redfin, echoed a similar sentiment, telling FOX Business that not only those currently looking house for rent see higher rents, but “people on leases could soon get a rent increase they didn’t expect.” Fairweather added that some residents are looking to rent as far away as Santa Barbara because of high demand closer to the fire zones.

Joel Berner, senior economist at Realtor.com, told FOX Business in an interview that from Jan. 4 to Jan. 11, there were several zip codes near fire zones that saw notable jumps in rental prices after the fires. The 90403 zip code, which he explained is in Santa Monica, southwest of the Palisades Fire, saw rents increase 33.9 percent. Another Santa Monica ZIP code, 90404, saw rents jump 23 percent, while downtown Pasadena’s 91125 ZIP code also saw rent increase 20 percent in that period.

Berner noted that the data is still “noisy” as other parts of LA saw rent drop week after week, and that once there’s a full week of data after the fire, it may be easier see the full effect of the rental market. impact

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A view of structures and homes damaged by the Palisades wildfires in the Pacific Palisades neighborhood of Los Angeles on January 11, 2025. (Axelle/Bauer-Griffin/GC Images/Getty Images)

California law limits price increases following a declared emergency to 10 percent of the pre-emergency price, and Attorney General Rob Bonta emphasized in a recent press conference that the anti-price-gouging rule applies to housing and rentals.

Zillow, a real estate marketplace that includes rental listingstold FOX Business that it “is taking steps to help address price increases in rental listings in affected areas that appear on our platform” by “activating our internal systems to flag potential violations and remove of the lists with price increases that exceed the threshold of the state of emergency”. .”

“If renters see a potential violation, we encourage them to report the listing to Zillow and California authorities. We believe it is essential that housing providers follow local housing laws, including consumer protections against price increase during and after a natural disaster, and we are providing resources to help them understand their responsibilities,” the Zillow spokesperson continued in the statement.

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Destroyed homes along the Pacific Ocean after the Palisades Fire in Malibu on Wednesday, January 15, 2025. (Eric Thayer/Bloomberg via Getty Images/Getty Images)

Stuart Gabriel, professor of finance and director of the UCLA Ziman Center for Real Estate, told FOX Business in an interview that while homes in fire zones were generally quite valuable, some of the residents may be more large or have a more modest income than theirs. wealthier neighbors, as some of the homes date back six or seven decades. That could pose challenges as they look to rebuild.

“You have to separate the value of the home from the occupants, and in the case of homes built in the 1950s and 1960s, it’s clear that the owners have wealth in the form of home equity, but they may not be households high incomes. In fact, they can be quite modest income households and in many cases they can be larger households,” he explained.

“So it’s not at all clear that these households have the means or even the financial ability to retire the loans they need and engage in a rebuilding process that will be difficult and complex and will take enormous time and energy,” he said. say added

Chimneys stand amid debris after the Palisades Fire broke out in Pacific Palisades, California on January 8, 2025. (AGUSTIN PAULLIER/AFP via Getty Images/Getty Images)

Gabriel noted that state and local authorities are looking to speed up the rebuilding of similar structures on lots affected by the fire, but added that there will likely be changes in terms of building density, the use of fire-resistant materials, different landscapes . and other infrastructure changes address fire risk.

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“The rebuilding of these neighborhoods will happen. It can’t help but happen: these neighborhoods are overvalued, they are overvalued. But it will take time for the facilities to be replaced and repositioned and for these communities to return to a new state of balance,” he said. Gabriel