On November 5th of this year, California voters will need to make a decision on Proposition 33, which may impact the future rental housing market.
Proposition 33 is a rent control measure. In recent years, the California government has attempted multiple times to implement rent control laws, but all efforts have ended in failure. Many voters who oppose such measures believe that while rent control laws may seem to protect tenants, they actually disrupt market balance, making tenants and landlords both victims.
Proposition 33 on the ballot aims to repeal the Costa-Hawkins Rental Housing Act, expanding local government authority over rent control for residential properties. If passed, this proposition would grant local governments greater power to control rental rates for private housing.
The voter handbook states: for tenants, if Proposition 33 is passed, tenants within the controlled range may benefit from lower rent increase rates. However, for tenants not within the control range, their rent may increase faster and become more expensive due to market adjustments.
For landlords, if Proposition 33 is passed, they may face stricter limits on raising rent, directly impacting their income. Real estate industry experts analyze that this situation may lead to two challenging scenarios: (1) some landlords may choose to sell their properties or exit the rental market; (2) the value of rental properties in California may decrease, with potential buyers giving up on purchasing properties restricted by rent control laws.
California senior commentator John Seiler pointed out in a column that implementing stricter rent control in California goes against basic economic principles. If landlords are forced to exit, the number of rental units available will decrease, and rents will become more expensive.
The California Association of Realtors (C.A.R.), which has a significant influence on the California housing market, is concerned that Proposition 33 undermines landlord rights, and extreme rent control will worsen the “affordable housing crisis.”
Economists also worry that allowing politicians and unelected government committees to freely implement and expand extreme rent control laws could result in these committees collecting fees and setting limits on landlords without voter approval, ultimately raising housing costs for everyone.
Cities like Los Angeles and San Francisco, which have already implemented similar rent control laws, are facing the most severe housing affordability and homelessness issues in California.
California legislative analysts believe that implementing more rent control laws may increase the government’s costs to enforce these laws, amounting to millions of dollars annually, with these costs being passed on to landlords. Stricter rent control regulations may lead to a decrease in the value of rental properties, causing the government to receive tens of millions less in property taxes each year.
Supporters of rent control believe that for many individuals relying on fixed incomes, rising rents may lead to homelessness. Proposition 33 aims to reduce housing costs.
However, Los Angeles voter Valerie Curry believes that Proposition 33 will not truly help tenants and may instead cause more trouble for them.
Curry, who has been in the real estate industry for a long time, said: “If the government interferes in private property, it will disrupt market balance, and landlords will be more cautious when choosing tenants. Landlords will have to set rents very high from the start because future increases are restricted. In this scenario, both landlords and tenants will become victims.”
She gave an example: “It’s like California’s insurance; just because the state government controls premium increases, it seems like it’s for the consumers’ benefit, but in the end, major companies all left. Now, people either cannot buy insurance or have to pay several times more than before.”
Regarding Proposition 33, the California Republican Party urges voters to cast a “No” vote; meanwhile, the California Democratic Party holds the opposite view. Voting “No” means disagreeing with government intervention in private property rental management. 🕊