As the wildfires ravaged Northern California, Gov. Jerry Brown on Oct. 9 declared a state of emergency, making it a crime under the state’s anti-price gouging law to raise the prices of goods and services, including housing rentals, more than 10%. The governor extended the ban through April 18.
Greedy landlords have found a loophole. The Los Angeles Times reports that in the areas hardest hit by fires, rents have skyrocketed and prosecutors say allegations of rent gouging are often not clear-cut.
The median rent listing increased from September to October by 32% across Sonoma County, 23% in Napa County and 16% in Santa Rosa, according to Zillow Real Estate Research. Neighboring counties unaffected by the wildfires showed little change in the median rent price.
Most of the listings are new, suggesting that at least some were vacation-home rentals on websites like Airbnb before the fires hit, according to an article by Aaron Terrazas, a senior economist at Zillow.
That disqualifies the owners from being prosecuted as rent gougers, a fact that has frustrated Sonoma County Dist. Atty. Jill Ravitch. She said her office has been “hamstrung” by the explosion of online vacation-home rentals.
The homes, which are usually rented at a premium on a short-term basis, are being rented long term at the same rates, Ravitch said.
The wildfires’ destruction also led to other distortions of the market. Insurance companies have engaged in bidding wars for renting scarce properties, paying multiple times the market rate for housing, Ravitch said. Renters whose insurance companies are footing bills that can be upward of $10,000 a month are probably thankful just to have a place to live and are not likely to report price gouging, she said.
Landlords can also legally evict tenants like Wehagen if the stated purpose is to remodel, according to Ronit Rubinoff, executive director at Legal Aid of Sonoma County. State law also makes an exception to the 10% price hike cap if the cost of the remodel is included.