Voters beware. There is a large misleading Trojan Horse on the Nov. 5 ballot: It’s called Proposition 33.
Prop 33 aims to repeal the Costa-Hawkins Rental Housing Act of 1995, which prohibits local jurisdiction from interfering with rent rates. While it seems that it would give more control over California’s high rents, the adverse effects of the proposition clearly outweigh the limited benefits.
Prop 33 expands local government authority to enact rent control on residential rental rates, aiming to reduce local property tax revenues by “at least 10s of millions of dollars.” It also repeals the Costa-Hawkins Rental Housing Act as it contradicts with the bill since the bill will allow local jurisdiction to limit rental rates. This means that local councils and city leadership can set and cap how much the initial rental fee and rental prices raise.
While Prop 33 may seem very appealing at first glance, under the surface, it will likely ruin California’s housing rental market, and may even further perpetuate the homelessness crisis.
First, you must look at how politicians can dictate the prices of home-renters, and how it removes what is called “vacancy decontrol.” Vacancy decontrol is a method that allows property owners to reset their rental price to market value after a tenant moves out, accounting for inflation and other economic issues that may occur while a tenant is still living there — sometimes for many years as the rental becomes a better and better deal relative to inflation.
However, Prop 33 removes this feature from state laws as property owners may be able to raise their rental rates by only a certain percentage, meaning they might end up losing money on their rental and deciding to sell. A study from the Southern California Rental Housing Association shows that a homeowner could lose $5,000 yearly if stuck at rent rates under market value.
Additionally, Prop 33 does not increase or support the building and funding of affordable housing, which is something that California desperately needs to combat the current housing crisis.
Economists and lobbyists against Prop 33 argue that it will decrease funding for housing, cease support and freeze construction of new affordable housing in California. Assembly Appropriations Chair Buffy Wicks says this proposition will allow cities to block new developmental plans and formulate bills that effectively freeze growth, ending California’s housing production in full stop just when it has seen much progress in recent years.
With California’s severe housing shortage, housing costs have doubled since 2010, and homelessness has skyrocketed; unfortunately, new rent control laws will only worsen the situation.
California has passed numerous laws and regulations to help increase funding and the construction of affordable housing. However, Prop 33 may repeal them via rent control, as it reduces the rental supply available now and into the future. As building more affordable housing is the most straightforward solution to this crisis, the implementation of Prop 33 will reset all the reform California has gone through in the past few years.
Moreover, researchers from Stanford University have found that rent control increases property investment, demolition and reconstruction of new buildings while reducing general renting and the occupancy of each rented house. In fact, many states are deviating away from rent control, realizing the costs far outweigh the benefits, with only California and eight other states endorsing a statewide or local rent control law.
Prop 33, if passed, makes things worse for the state. For the future of California’s housing situation, vote no on Prop 33.
