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 worsen the city's housing shortage.
Newsom on Tuesday issued an executive order aimed at limiting speculation in real estate in areas where homes were destroyed or damaged in fires. City Council member Eunice Hernandez said he later filed a motion calling for a one-year moratorium on certain types of evictions in fire-affected areas.
Wildfires destroyed thousands of structures and displaced tens of thousands of people. There is growing evidence that these have sparked bidding wars, pushed rental property prices up into double digits and put pressure on a housing market that was already one of the most affordable in the United States.
The bidding wars and rent increases are occurring even though Newsom declared a state of emergency last week that prohibits increases of more than 10% during the crisis.
The first part of Newsom's two-part executive order prohibits unsolicited offers for less than the fair market value of a property before the fire. The ban expires after three months. Newsom said he has heard from owners who have received such unsolicited offers over the past week, and that owners in such situations are “exploited by unscrupulous individuals seeking to profit from this disaster.” “They may be particularly vulnerable to conduct,” he said.
The second part calls on the California Department of Real Estate to investigate predatory behavior against owners and inform the public about it.
A City Council motion filed by Hernandez and another City Council member, Hugo Sotomartínez, proposed a moratorium on evictions from homes where tenants are experiencing financial or medical hardship as a result of the fire. The intent was to stop a “predatory pattern” of rent hikes documented after past wildfires in California and Hawaii, according to a draft motion published by local television station KTLA.
“The sad reality is that people are taking advantage of this tragedy to try to raise rents and evict tenants,” Sotomartinez said. “Until then, housing was already unaffordable for the working class.”
KTLA reports that the City Council motion will likely be considered by the City Council's Housing and Homelessness Committee before being returned to the full City Council for a vote in the coming weeks.
