Los Angeles Rents Poised to Rise Following Wildfires

As displaced residents seek housing, vacancy rates are expected to decrease

Los Angeles residents affected by the recent wildfires can expect a sharp increase in rent prices as they seek new housing in the aftermath. Real estate experts predict that the already tight and expensive rental market will become even more costly as nearly 180,000 displaced residents search for short- and long-term housing options.

“The LA housing market was already tight and undersupplied prior to the fires, so this will inevitably lead to increased rental housing costs in the immediate term,” said Sean Roberts, CEO of Villa, a California-based offsite homebuilder. 

Before the fires, Los Angeles was already one of the most expensive and competitive housing markets in the U.S. According to the California Housing Partnership, nearly half a million low-income households in the state lacked access to affordable homes. Additionally, renters in Los Angeles needed to earn $48.04 per hour—almost three times the city’s minimum wage—to afford the average rent of $2,498 per month. In contrast, the national average rent in the U.S. is $1,748 per month, making Los Angeles rent nearly 1.5 times the national average. 

Demand Surge 

• According to real estate experts, Los Angeles residents displaced by wildfires will face higher rent as the demand for housing grows
• LA's housing market was already expensive and undersupplied, with a shortage of 500,000 units
• Renters needed to earn $48.04 per hour to afford an average rent of $2,498, nearly 1.5 times the national average

Adding to these challenges, Los Angeles is currently short 500,000 housing units, according to the County of Los Angeles Homeless Initiative. With thousands of people displaced by the fires, the demand for housing is expected to increase dramatically, further stressing the already overburdened market.

While it’s too early to determine exactly how much landlords will raise rents, experts agree that rent hikes are inevitable. However, some hope unscrupulous landlords won’t take advantage of displaced residents. “Hopefully, unscrupulous landlords don’t resort to price-gouging people impacted by the fires who need a place to live,” said Roberts. “This behaviour should be prevented given the declared state of emergency—which caps rent increases based on certain parameters—but it’s hard to know how well that will be enforced.”

Real-estate analytics firm CoStar also predicts a drop in vacancy rates for multifamily housing in the first quarter of 2025 as displaced residents seek shelter. “In the short term, rent growth will certainly accelerate, and vacancy will decrease as displaced households need housing,” said Jay Lybik, national director of multifamily analytics at CoStar. “It’s difficult at this time to know how much higher, however.” Lybik added that rent growth is likely to increase from the current 1% range, though it’s still far from the peak rent growth seen during the pandemic in early 2022, which reached 6.7%.

In addition to price increases in the immediate area, experts suggest that nearby housing markets, which were not directly impacted by the fires, may also experience rent increases as families look for housing outside of the most affected areas. “Families seeking housing may have to make sacrifices on either location or affordability, forcing some renters into neighbouring regions or smaller cities,” said Daniel Cabrera, founder and CEO of Fire Damage House Buyer, who has 15 years of experience in fire-damaged real estate.

The long-term effects on Los Angeles’s housing market will likely stretch for years. Rebuilding the destroyed housing stock will take considerable time, and experts predict that new construction efforts will drive demand for rental properties in the region. “As LA turns towards rebuilding the impacted neighbourhoods in the months and years to come, workers involved in the rebuilding will also need housing proximate to the areas being rebuilt, which will also drive additional demand for rentals,” Roberts added.

History shows that the housing market can face severe inflationary pressures in the wake of a natural disaster. For example, following Hurricane Katrina in 2005, New Orleans residents experienced a 33% increase in rent due to limited supply and intense competition for housing. “Unfortunately, natural disasters tend to put a lot of inflationary pressures on the housing market,” said CoreLogic Chief Economist Selma Hepp. “Rebuilding takes years.”

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