Even before the wildfires tore through the hills of Los Angeles, the region faced a serious housing shortage. Now that residents of the Palisades and Altadena, among others, have to find shelter for the short- and mid-term, that problem has only grown worse. With available housing at a premium, premium housing might have been an option -- if Gavin Newsom hadn't incompetently intervened in the guise of white-knighting.

Faced with thousands of displaced families hiking demand in an already depleted inventory, Newsom imposed a price cap on any new rental listings of $10,000 a month. And that price cap has had the practical effect of keeping inventory off the market, as the LA Times reports this morning while a new fire breaks out in Bel-Air:

In Los Angeles’ high-end rental market, it’s long been common to find homes advertised for $10,000 a month or more.

But in the wake of this month’s devastating wildfires in Pacific Palisades and Altadena, new listings above that amount are effectively barred by state law, just as a crush of wealthy, displaced families are looking for places to go.

The price limit is keeping off the market homes that prospective landlords would otherwise offer to displaced families, say local real estate agents and brokers, tightening even further the vise people are facing in their search for housing. More than 11,000 homes have been confirmed destroyed in the fires and reports of widespread price gouging and bidding wars have followed as the little available rental inventory gets snapped up quickly.

Palisades residents looking for rental homes elsewhere in Los Angeles comparable to the ones they’ve lost would have been squeezed for options below the limit even before the fires. Last year, two dozen four-bedroom homes in an oceanfront Manhattan Beach neighborhood rented for a median price of $16,000 a month, according to data from the multiple listing service.

Those clearly aren't hovels, but they aren't mansions, either. It is incredibly expensive to buy or rent in Los Angeles, thanks to state and local regulations that disincentivize residential development, particularly for single-family units. Manhattan Beach isn't even particularly wealthy; it's a solid upper-middle-class enclave with a great coastal location, but perhaps a step down in stature from the Palisades and certainly from Malibu, where a large number of families were displaced in the wildfire.

Bel-Air and Brentwood are in another class -- and that almost went up last night:

News of the fire broke shortly after 11 p.m. Wednesday, and the blaze appeared to grow quickly. Around 1 a.m., TV footage appeared to show the fire slowing, its glow diminishing, amid relatively calm winds.

Shortly before 2 a.m., the Los Angeles Fire Department said the fire, which burned 40 acres, had stopped spreading. Officials lifted an evacuation warning for parts of Bel-Air, including homes along Casiano Road and Chalon Road, as well as Moraga Drive, which is lined by multimillion-dollar homes. Authorities earlier lifted an evacuation warning for a part of Brentwood including the Chalon campus of Mount Saint Mary’s University.

Firefighters responded valiantly to that blaze and managed to contain it without losing any structures. However, these fires are occurring in the wealthier enclaves of Los Angeles, and many of the families displaced have the resources to absorb higher costs for higher-end properties. Newsom's price caps are keeping that inventory sidelined, creating an artificial shortage which is always the end result of the socialist impulse to dictate price caps. And this market was already in a shortage situation. 

This policy will have a regressive impact on an already sharply regressive market. Thanks to the policies in place already, housing is already too expensive for working- and even middle-class families in LA. Even when I lived there 28 years ago, many of the people who work in the LA-Orange County area had begun moving to Riverside and other counties and making long commutes to work in order to find affordable housing. Those refugees with significant means won't go homeless without access to those Manhattan Beach properties, but they will end up taking what's left of the available housing under the cap limit, especially as those prices will rise and keep less-wealthy families from accessing them. Rationing and price caps don't just impact prices and inventory at the top, but all through the market.

What did Newsom and California gain through these price caps? Nothing but some cheap virtue signaling. The market would have balanced out prices based on supply and demand quickly enough, and on the higher end of the market where the consumers have the most options thanks to their resources. Instead, Newsom just treated Californians to a crash course in Econ 101, and also on the inherent failures of Marxist public policy. Again.

Kudos to the LA Times for reporting on this honestly. Perhaps owner Patrick Soon-Shiong really is cleaning up his newspaper's severe and historical bias.