Supply-Demand Imbalance From Fires Stokes LA Rental Market

L.A.’s high-end rental market has brought out the best and worst in people as dwindling supply and bidding wars fuel inflation.

“It’s incredible. This is where we really see true colors in people,” Pardee Properties CEO Tami Pardee said Friday of what she’s seeing in the rental market.

MarketWatch, citing an estimate from CoStar Director of Multifamily Analytics Jay Lybik, suggested overall rents could rise anywhere from 8 percent to 12 percent. However, data firms have yet to model how the trend may play out for Los Angeles’ housing market, where Pardee said renters typically pay in the range of $5,000 to $15,000 per month.

Leaflet map created by Adam Farence | Data by © OpenStreetMap, under ODbl.

There are currently about 4,300 rentals available throughout Los Angeles County in that $5,000 to $15,000 range listed on Zillow. For perspective, Los Angeles County Sheriff Robert Luna told reporters during a Thursday press update nearly 180,000 people are under evacuation orders as a result of the Palisades, Eaton, Hurst and Lidia fires.

A look at properties available for sale indicates an even smaller pool. Analysis from The Real Deal looking at the number of listings in and around the affected markets of the two largest active fires in Pacific Palisades and Altadena show 685 homes for sale valued at $3.4 billion.

Jamie Lane, senior vice president of analytics and chief economist at short-term rental data firm AirDNA, said a look at what occurred during the fires in Maui and more recent hurricanes can offer a glimpse into the increased demand for residential that Los Angeles may see in the coming weeks and months.

It could pull the overall short-term rental market out from a sluggish few years for growth.

The average daily rate for a three-bedroom home in Los Angeles was $450 a night, up 1.4 percent in 2024 from the previous year. Rates in 2023 and 2022 declined 8 percent and 1.5 percent, respectively, Lane said.

“We did see price increases pretty significantly during the pandemic, but they’ve definitely moderated in recent years. For apartments, we see a similar trend,” Lane said.

Good and bad

Pardee has seen the spectrum of how people have responded to those in need. She had one person reach out to offer units at half price for six months. Another threw open the doors to his home.

“I have the most beautiful people and clients and they reach out,” Pardee said of their generosity.

She’s also seen flipside behavior emerge in the past few days.

“Then we have other people that I just let go of as clients — because I’m not going to engage in this type of behavior — who actually raised their prices Tuesday,” said Pardee, who severed ties with those clients Friday morning.

Pardee has mobilized her brokerage’s network to create a database of homes available as rentals in a bid to unlock other supply options not already in the MLS. These include everything from second homes to ADUs. The database is now at around 100 properties across Venice, Marina del Rey, Playa Vista, Pasadena, West Hollywood and even as far as Palm Desert.

“We’re seeing 15 to 50 offers on every listing in the MLS and that’s what’s driving the prices,” Pardee said. “People are outbidding each other, not by much, and that’s a normalized market. That’s what happens when, I hate to say it, there’s a bidding war.”

Friday morning The Oppenheim Group President Jason Oppenheim said he and his brokerage had received more than 40 emails and phone calls from people who lost their homes, asking for help after the brokerage said publicly it would represent people at no cost.

The volume of demand is now pushing the marketplace’s boundaries.

Brentwood, Westwood, Santa Monica and other markets close to the Palisades are in high demand, but Oppenheim said some are looking farther south into the South Bay and even Orange County. Hotels, similarly, are filling up in Newport Beach and even as far south as San Diego, he said.

Oppenheim sent one of his clients in need of housing to Mar Vista on a property available for $20,000 a month that already has eight other interested parties. His client said he was willing to pay over asking.

In another instance, Oppenheim showed a client a Santa Monica home Thursday, on the market for $13,000 a month. His client offered $20,000, with six months upfront, and the landlord came back at $23,000 a month. Oppenheim described the situation as a “shit show.”

“That’s what’s going on here. I don’t think people should be taking advantage. It’s not an anomaly,” Oppenheim said of rising rents. “There is a supply-demand imbalance now and it’s not going to be corrected any time soon. In fact, it’s probably going to get worse because there are people that have yet to enter the rental market because they’re still waiting for their insurance authorization and confirmation that their insurance is going to pay their rent.”