The tragic Los Angeles area wildfires have prompted thorough newspaper reporting, but they also have resulted in clickbait nonsense.
The most vapid piece we’ve seen comes from the Washington Post, which despite its headquarters 2,700 miles away, recently published a piece on L.A.-area rental price gouging.
The headline is stark: “Rent rose by 20 percent across LA County after fires. That’s illegal.” Well, that’s not necessarily so. Gov. Gavin Newsom signed an executive order applying anti-price-gouging rules to landlords throughout L.A. County. They are indeed forbidden from raising rents 10% or more above what they previously were charging.
The newspaper “analyzed the prices of about 1,700 rental units posted in the two weeks before the wildfires began Jan. 7 and nearly 3,000 listed” in the city and county. It found that median rents increased from 12% for multi-family homes to 24% for single-family homes.
To the degree the Post looked at increases at specific properties it might have a point, but a broad-brush analysis of median prices doesn’t necessarily mean a violation of gouging rules as a different set of properties is on the market now.
Perhaps some people decided to list ones they had never listed before. Sure, there’s other evidence of rental “gouging,” but this reporting just fans the flames.
Allowing prices to rise to market levels helps efficiently distribute scarce real-estate listings. After fire destroys 16,000 structures, there will be fewer places available.
If the government doesn’t allow prices to rise based on demand, some people will benefit from under-market prices — but most people won’t be able to find a place.
Although dramatic price hikes are distasteful, they serve an economic purpose and help more people find much-needed housing.
For instance, higher prices encourage property owners with vacant properties (or extra rooms) to let them out.
They spur investors to develop more units. Anti-gouging lawsuits only discourage people from leasing vacant units.
That market process would be a great story idea for Post editors if they want to seriously cover the rental implications of the fires.