Greatest Rent Increases (5-6%) Are in Areas Bordering Fires

Areas like Santa Monica and Pasadena has seen the biggest rent growths as fire victims move around within these neighborhoods on 12-month leases or shorter term leases. Pasadena rents have risen about 6.2% from last year, and Santa Monica rents have risen about 5.1% from last year. All other parts of LA has risen on average of 1.3% since last year.

Market Has Noticeably Slowed Down. But Who's Selling? Who's Buying?

The headlines change daily, causing chaos, fear and uncertainty. But the effect is clear: Buyers and Sellers are afraid. It's understandable. We know there are going to be effects from tariffs, more inflation, and cost of goods rising. We also know that this affects real estate as the cost of materials and building go up. So while there may not be a flurry of buyers, the prices are not expected to crash. We still have way too many people locked in below 3%, and too many people who bought 10-15 years ago who have too much equity.

So Who's Buying Right Now?

- Pent up buyers who have been waiting over 12-18 months for interest rates to drop, and don't see that happening are just going for it.

- Renters in the $4000-$7000/mo bracket) who have seen their rents rise year over year are also starting to look at smaller homes and a hedge against inflation.

- 1031 Exchange Investors

- People who need to diversify while the stock market remains volatile

Who's Selling Right Now?

Sellers who bought in the past 18-24 months who are locked in at 6-7% and sellers who have a lot of equity--those who bought between 2009-2013, are starting to sell. The psychology is interesting since owners locked into <3% mortgage rates are not selling--it's like they don't want to let go of their unicorn rate. (Note: the average 30yr interest rate since the 1970s is 7.75%. Not vastly different from today's rate of 6.69%, so yes, rates under 3% is unheard of). 

Post-Fires, Prices on Sales and Rentals Going Up

Rentals of single family homes will be most in demand while displaced families need temporary housing until rebuilding or more permanent relocation is done. The problem is that this is the stock of housing that is in shortest supply in LA County. Most rentals are in the form of apartment lease buildings, multi-plex housing, or mom-and pop condo owners. This has caused an increase in prices, but strict price gouging laws are now in place where no landlord can increase a rental price by more than 10%, if it was advertised 1 year prior to the Emergency declaration. Huge fines and imprisonment imply.

Because nearly 7000 housing structures have been destroyed in the fires, there will be thousands of people who will need housing, making the housing shortage worse. Already, prices of sales in non-burn areas are increasing.

One thing is for sure, in the short term, the majority of those displaced will be renting. This is already causing a large number of renters to search in Los Angeles, as well as in other areas including Orange County.

Downtown, which is a non fire hazard zone, has been more attractive to residents looking to move out of fire zones.

Mayor Bass Orders Quick Rebuild Asap

Finally, some common sense by policy makers. Mayor Bass has approved fast-tracking rebuilding due to the wildfires.

https://mayor.lacity.gov/news/mayor-bass-issues-sweeping-executive-order-clear-way-angelenos-rebuild-their-homes-fast

Price Gouging is Illegal and You are Doing So at a Huge Risk

While the demand for rental housing is rising and soon more buyers will be on the market, there have been many emergency laws put in place in regards to price gouging. This is a serious crime that can land the homeowner in jail. Talk to an attorney if you are considering raising the price more than 10% from the price it was pre-disaster.

Video on Price Gouging: https://www.youtube.com/watch?v=Bvt3mwflfbc

Some tips:

-Ensure that any rent increases do not exceed 10% of the previous rent or the advertised rent before the state of emergency. For new rentals, the price should not exceed 160% of the fair market value established by the U.S. Department of Housing and Urban Development. You can find the HUD fair market rents limits for each zip code HERE.

-If demand pushes up the price on a lease, it is important to remember that these statutory requirements still apply. A good rule of thumb is to just choose the best qualified applicant. If you choose to accept an amount above the statutory limits, this is highly not advised, and you should consult an attorney as you still could be in violation of housing laws.

Wildfire Resources Now and Ongoing

The scale of the wildfires is such that everyone in LA seems to know at least one person affected by the devastation of the week, which is still very much in effect with no end in near sight. It's such a chaotic, sad and stressful time for all. For those of you in need of help, here are some resources below:

Temporary Free Week of Airbnb 

https://news.airbnb.com/airbnb-org-offers-temporary-housing-to-people-impacted-by-the-los-angeles-wildfires/

Fire Recovery Support

https://outsmartdisaster.calosba.ca.gov/support-and-resources-for-los-angeles-area-wildfire-recovery/

https://www.lahsa.org/news?article=1014-resources-to-support-those-during-the-l-a-fires

Community Dogsitting Assistance

https://www.caninerescue.club/sitting

Free Food for Evacuees

https://www.instagram.com/p/DElNxW9Jk18/?utm_source=ig_web_copy_link&img_index=1

Apply for Aid Through FEMA

https://www.fema.gov/disaster/4856

How you can help:

Donate to Wildfire Recovery Fund

https://www.calfund.org/funds/wildfire-recovery-fund/

Donate to the Red Cross

https://www.redcross.org/local/california/los-angeles/about-us/our-work/california-wildfires-response-january-2025.html

Donate to the California Fire Foundation

https://cpf.salsalabs.org/disasterrelief/index.htmlCalifornia Fire Foundation

Will LA Be Olympics-Ready?

Massive Challenges for LA Before Olympics

https://www.forbes.com/sites/michaelgoldstein/2024/12/23/will-los-angeles-really-be-ready-for-the-2028-olympics/

Massive Art District Development Changes to Mixed Use

 Massive Mixed Use Arts District Development Continues

A development in the Arts District once slated for commercial is applying to change a portion of the project to residential (apartments for lease).  The investment and growth in the area for the past 5 years has been steady, and better than other parts of DTLA. Meanwhile, condo prices in the area have dipped a bit due to the influx of residential competition. As we all know, this is temporary once the development brings in more residents and demand.

https://la.urbanize.city/post/bjarke-ingels-designed-670-mesquit-development-could-cut-offices-more-housing

Quick DTLA Stats

 Quick DTLA Stats

Average Sold Price/sf:

Historic Core: $616/sf

Arts District: $612/sf

Social District (Formerly "South Park"): $714/sf

Average Leased Price/sf:

Historic Core: $2.73/sf

Arts District: $3.09/sf

Social District (Formerly "South Park"): $3.29/sf

Average Days on Market for Sales:

Historic Core: 77

Arts District: 72

Social District (Formerly "South Park"): 105

South Park DTLA Renamed to "Social District"

DTLA's South Park Renamed "Social District"

Not the most creative name, but South Park, which doesn't actually have a lot of parks, has been officially renamed "Social District." The argument being that it's the hub where LA Live, Crypto.com Arena, Convention Center, hotels, lots of upcoming dining spots, etc are located.