A Counterintuitive Trend

By Ky Trang Ho

The media was wrong. Despite the barrage of scary headlines about rising rents and price gouging, Los Angeles rent prices dropped in January even though massive wildfires ravaged 9,418 homes and structures and scorched 14,021 acres.

It defies conventional wisdom. Fewer homes should have exacerbated the housing shortage, driving up demand and prices, owing to an expected surge in demand as displaced residents sought temporary housing. Yet rental trends data from listing sites Apartments.com, Rent.com, Renty.ai, Zillow.com, and Zumper.com show rents in Los Angeles flatlined or dropped the past month, as of February 5, 2025.

Apartments.com

Bar chart: Average rents in Los Angeles comparing Q1 2024 to Q1 2025 through February 5, 2025 from Apartments.com.

Rent.com

Graph: Average rents for studios, 1-, 2- and 3-bedroom units in Los Angeles from February 1, 2024 through February 5, 2025 from Rent.com.

Renty.ai

Graph: Median rents for Los Angeles studios from January 1, 2024 through February 5, 2025 from Renty.ai.

Graph: Median rents for Los Angeles 1-bedroom units from January 1, 2024 through February 5, 2025 from Renty.ai.

Graph: Median rents for Los Angeles 2-bedroom units from January 1, 2024 through February 5, 2025 from Renty.ai.

Graph: Median rents for Los Angeles 3-bedroom units from January 1, 2024 through February 5, 2025 from Renty.ai.

Zillow.com

Chart and graph of rental price trends in Los Angeles city comparing 2024 to 2025 through February 5, 2025 from Zillow.com.

Zumper.com

Graph of rent price trends for all bedroom counts in Los Angeles from January 1, 2023 to February 5, 2025 from Zumper.com.

Demonizing Housing Providers

The media selectively reported on rent increases, while ignoring the rent decreases. If you Google “rent decrease Los Angeles,” there are no news results in the past week, as of this writing. The only article that shows up is the one I wrote for Medium: “Debunking the Myth: Los Angeles Wildfires and Rent Gouging Claims Lack Evidence.”

The third estate perpetuates a skewed narrative that unfairly demonizes landlords and fuels public outrage. By focusing on the extreme cases of rising rents and depicting them as the norm, news outlets capitalize on sensationalism to attract eyeballs and social media shares.

Hyperfocusing on rent hikes perpetuates a simplistic villain-versus-victim narrative that landlords are exploitative while ignoring their challenges, such as rising property taxes, maintenance costs, insurance, and overly tenant-biased housing laws.

Why Rent Prices Declined

Here are possible reasons for the decline in rent prices in Los Angeles:

Temporary Relocation and Outmigration

Many residents affected by the wildfires could have relocated temporarily or permanently to other cities or states. People have been fleeing the City of Angels and the Golden State in recent years, owing to a disdain for left-wing politics and sky-high living costs.

The COVID-19 pandemic made remote work a necessity, allowing many Angelenos to move to less expensive areas while working for the same employers. Wildfires may have accelerated the trend. With fewer people competing for housing, rental demand softened, lowering prices.

Graph: Year-over-year population percent change in Los Angeles County and Los Angeles City 2012–2013. Source: Los Angeles County Economic Development Corporation (LAEDC) 2024 Economic Forecast

Graph: Comparing population percent change in Los Angeles County, California, and U.S. by decade from 1970 to 2022. Source: California Regional Analysis Project.

Increased Housing Supply

Los Angeles has seen a plethora of new housing construction in the past few years as the state passed laws to encourage homeowners to build accessory dwelling units, ADUs. Perhaps this increase in supply has more than offset the loss of housing caused by the fires.

Bar chart: Number of single-family home starts in Los Angeles, California from 2015 to 2022 from Statista.com

Rent gouging laws kept high-end homes off the market

Another potential reason for the recent price decline could be the California restrictions placed on newly listed rental properties following the emergency. Under these regulations, a new rental property — one not listed before the disaster — cannot be priced higher than 160% of the “fair market value” (FMV) in its zip code after such an event.

For instance, in Pacific Palisades (zip code 90272), the FMV for a two-bedroom unit is $3,820, as reported by the Los Angeles Almanac. This means the maximum allowable rent for a new two−bedroom would be $6,112 per month, calculated by multiplying the FMV by 1.6. A three-bedroom unit could be listed for no more than $7,840, calculated by multiplying the FMV by 1.6.

While these figures may seem high, data from Rentcast show that the average rents for two- and three-bedroom units in the area already surpass these thresholds at $6,420 and $8,060 per month, respectively. Landlords with units priced at or above these averages have little motivation to list their properties, as doing so could lead to accusations of price gouging or force them to accept rents below current market rates.

Hence, California Governor Gavin Newsom issued an executive order on February 4 to lift rent limits in some affluent zip codes.