California Gov. Gavin Newsom and Los Angeles City Council members have taken steps to prevent real estate speculation and evictions amid growing concerns that devastating wildfires will further worsen the city’s housing shortage.
Newsom issued an executive order Tuesday aimed at limiting speculation on properties in areas where homes have been destroyed or damaged by fires. Council member Eunisses Hernández said she later filed a motion calling for a one-year moratorium on certain types of evictions in fire-affected areas.
Wildfires have destroyed thousands of structures and left tens of thousands homeless. There is growing evidence that they have sparked bidding wars and driven up rental prices by double-digit increases, putting pressure on housing markets that are already among the most unaffordable in the country.
Bidding wars and rent increases are occurring despite a state of emergency declared by Mr. Newsom last week that prohibits rent increases of more than 10% during the crisis.
The first part of Mr. Newsom’s two-part executive order prohibits unsolicited offers for less than the property’s fair market value before the fire. The ban expires in three months. Owners in such situations “may be particularly vulnerable to the exploitative practices of unscrupulous individuals seeking to profit from this disaster,” Mr. Newsom said, following a sequence of hearings from owners who have received such unsolicited offers last week.
The second part calls on the California Department of Real Estate to investigate predatory practices against owners and inform the public about them.
A city council motion introduced by Mr. Hernández and another council member, Hugo Soto-Martínez, proposed a moratorium on evictions from homes where tenants are experiencing financial or medical hardship as a result of the fire. A draft of the initiative released by local television station KTLA said it was intended to prevent a “predatory pattern” of rent increases recorded after previous wildfires in California and Hawaii.
“It’s a sad reality that people are trying to use this tragedy to raise rents and evict tenants,” Soto-Martínez said. “Before, housing was already unaffordable for the working class.”
KTLA reports that the council motion will likely be considered by the council’s Housing and Homelessness Committee before being referred to the full council for a vote in the coming weeks.
