🏡💚 The inhumanity of price gouging
January 24, 2025
It’s been over two weeks since they first began and fires still burn in LA. While the Eaton and Palisades fires are mostly contained, the Hughes fire started on Wednesday and has already burned over 10,000 acres, while new fires are igniting near San Diego and the border.
In the last newsletter, I wrote about the need to stay vigilant against disaster capitalism, and the predatory profiteers and speculators that would try to turn this tragedy to their advantage. It turns out we didn’t even get to put out the fires before the exploitation began.
Many of you have probably seen stories about the shameful home rental price gouging that is rampant in LA, as thousands of displaced and evacuated residents look for places to stay. Apartments listed at over $20,000 a month. Bidding wars for available apartments. Rental listings going up 20%, 30%, over 50% from just before the fires began.
At our coalition call last week, staff from Strategic Actions for a Just Economy (SAJE) shared about the widespread price gouging they’ve been helping to document. Soon after the fires began, Chelsea Kirk at SAJE started a publicly-available crowdsourced spreadsheet to track and report on instances of price gouging. With the help of many volunteers (including a number of you), this has grown to over 1,400 Zillow listings in which landlords appear to have increased rents above the legal limit — in some cases doubling or tripling the original price.
California law states that during a state of emergency or local emergency it is illegal to increase prices more than 10% of the price immediately prior to the emergency (this includes housing, but also things like gasoline, transportation, medical supplies, and other consumer goods and services).
The problem, of course, is enforcement. That’s why the community tracking and reporting is so critical, and why this is such a brilliant initiative by Chelsea and community organizers in LA. They recognize that our officials may not ultimately hold these profiteering landlords accountable, but tenants and community members can — through public shaming, direct action, and organizing.
To his credit, Attorney General Rob Bonta has begun taking action on this too. Early on in the wildfire crisis, his office was already taking note of price gouging reports. On Saturday, January 12 he issued a warning to those that would try to take advantage of this situation for their profit: “It’s called price gouging. It is illegal. You cannot do it. It is a crime punishable by up to a year in jail and fines.”
Earlier this week, he followed through on this warning by issuing charges against a local real estate agent (Mike Kobeissi) for attempting to price gouge a couple who lost their home in the Los Angeles Eaton Fire. After the couple’s rental application had been received, they were told that the price had increased by 38%. They decided not to rent the apartment because of the increase.
Bonta’s office has said they’ve issued over 500 warning letters. “Today, we are making good on our promise to hold price gougers accountable, with more to come," said Bonta in an online statement. "May this announcement serve as a stern warning to those who would seek to further victimize those who have lost everything.”
Far from isolated instances of exploitation, the widespread price gouging exposes the fundamental cruelty of our housing market. After all — it’s just supply and demand, right? The fact that this is coming during a heartbreaking crisis highlights the inhumanity of the system, but this behavior is just as prevalent during non-emergencies.
That is in part due to the literal lack of humanity involved in this behavior. As Bonta noted in one of his earlier press conferences, “Some of our hotels and some of our landlords use algorithms based on demand and supply to set their prices.” Indeed, a number of these cases don’t involve actual humans actively making changes to their rental prices — instead, they let dynamic algorithms make those changes for them.
Reviewing the crowdsourced spreadsheet, In These Times found one venture capital-backed landlord, Blueground, that showed at least 9 listings appearing to hike prices above the legal limit after the fires. According to its website, Blueground employs a dynamic pricing model ​“driven by algorithmic software that determines the optimal price based on certain factors like seasonality, availability, duration, and more.”
I will write about this more extensively soon, but this may not be the first time you’ve heard of algorithmically-driven rental pricing. Last year, the Justice Department sued RealPage for violating antitrust law. RealPage’s algorithmic pricing lets landlords of multifamily dwellings effectively collude and set rents above market rate, essentially engaging in a price-fixing scheme. This software takes confidential, competitively sensitive information and uses artificial intelligence to suggest what rent a landlord should charge. RealPage has pitched this software as maximizing landlords’ profits, and boasted that it lets them “outperform the market.”
Last newsletter, I talked about a convergence of crises. Here, we see how multi-layered and interconnected that polycrisis truly is. Not only do we have a for-profit housing system that can justify a crisis of unaffordability because of “supply and demand,” the so-called “market” is anti-competitively using AI to actively collude in fixing rental prices at higher rates. Even in a climate disaster.
There will be a lot of talk this year about what to do in the wake of the LA fires. There will be a lot of legislation (more on that in future newsletters). There are many things I’d like to see from emerge from all of this and lessons I hope we learn, but at the very least I hope that the Legislature can take action on this algorithmic price-fixing as one small step to fight back against one tool that is driving the affordability crisis.
In the short-term, tenant and community organizers are calling for tenant protections to provide immediate relief, including an eviction moratorium and rent freeze. Keep LA Housed is circulating a sign-on letter with these demands (form to sign on is here), and many others are organizing to gain statewide and local support.
There are many ways to support communities down in LA, including through fundraisers, donations, direct cash assistance, and mutual aid. But I also hope this can serve as a stronger and more urgent motivation for climate, environmental justice, tenant, and housing groups to stand together and co-create solutions. The climate and housing crises are fueling each other. We will need to learn how to address them simultaneously, together, united.
Community members with Keep LA Housed allies rally outside of LA Board of Supervisors last week. Source: ACCE’s Twitter
WHAT WE’RE READING
Opinion: Before rebuilding, we should recognize the fires’ tragedies and opportunities (LA Times) — this contains multiple opinion pieces/perspectives, but one of these (titled “A chance to address climate and housing crises”) is by Chelsea Kirk, where she talks about the need for social housing and decarbonization. Highly recommend!!
Imperial Beach OKs new renter protections. Advocates say they’re not strong enough. (San Diego Tribune) — more to say on this soon!
South Berkeley tenants feared losing their homes after landlord’s death. A local land trust is helping them stay (Berkeleyside) — one feel good story, and social housing win.
Feel free to reply any time! I always enjoy hearing from people and getting any feedback/questions/additional thoughts.
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