Proposition 33: A Look at Its Impact on California’s Housing Market

California’s housing crisis has reached unprecedented levels. With skyrocketing rents and a severe shortage of affordable housing, the state’s residents face increasingly tough choices. Renters in California typically pay about 50% more for housing than renters in other states. In some parts of the state, rent costs are more than double the national average. High construction costs, cumbersome local regulations, and limited housing all contribute to the high rent and further hinder efforts to boost housing stock. Amid this backdrop, Proposition 33 has been introduced with the hope to address the state’s housing challenges through local rent control laws.

Principle Behind Proposition 33

Proposition 33’s central aim is to overhaul the current rental housing landscape by repealing the Costa-Hawkins Rental Housing Act. This measure, in place for three decades, has set boundaries on local rent control laws to protect both property owners and tenants. Proposition 33 looks to address affordability, eviction protections, and housing stability by giving local municipalities more power to control rents.

Callout: A nearly-identical proposition was also introduced in 2018 (Proposition 10) and 2020 (Proposition 21).

Key Components of the Proposition

1. Rent Control and Rent Stabilization: Proposition 33 would enable local authorities (cities and counties) to set limits on how much rents can increase annually, expanding the scope of rent control to include single-family homes and newly built units. It also prevents the state from taking future actions to limit local rent control.
2. Just Cause Eviction Protections: The proposition would provide stronger protections against unjust or arbitrary evictions, ensuring that tenants are not removed without a valid reason. It would outline specific conditions under which landlords can terminate leases.
3. Tenant Rights and Protections: Proposition 33 proposes establishing minimum standards for habitability to ensure that rental properties meet basic health and safety requirements.

Reasons in Favor of Proposition 33

1. Addressing Housing Affordability: By limiting how much rent can increase, Proposition 33 aims to protect tenants from steep and unaffordable rent hikes. The proposition could help preserve existing affordable housing units by curbing uncontrolled rent increases.
2. Promoting Housing Stability: By improving rent control and eviction protections, Proposition 33 could help reduce homelessness and displacement, providing stability for families and communities.
3. Ensuring Fairness and Equity: The proposition aims to create a more balanced approach to rental housing, aligning with principles of social justice and economic equity.

Reasons Against Proposition 33

1. Disincentivizes Investment: The proposition could significantly alter property owners’ rights, leading to reduced control over rental rates and property management. With stricter rent controls, investors might be discouraged from purchasing or developing rental properties, affecting the overall market.
2. Effects Housing Market Dynamics: Expanded rent control could disrupt the housing market, potentially leading to reduced property values and less incentive for new housing developments. Increased regulations and costs associated with rent control may make it difficult for property owners to maintain and improve their properties.
3. Increases Operating Costs: New regulations could lead to higher operating costs that property owners may struggle to pass on to tenants, impacting financial stability.

Why You Should Vote NO on Proposition 33

As a property owner, voting NO on Proposition 33 is crucial to protect your investment and California’s housing market. Here’s why:

1. Decline in Property Values: Widespread rent control could reduce the market value of rental properties, making them less attractive to potential buyers and investors.
2. Reduced Property Tax Revenues: A drop in property values would lead to decreased property tax revenues, potentially causing budget shortfalls for local governments and schools.
3. Increased Costs and Regulations: Expanding rent control would introduce new fees and regulations, increasing operational costs and limiting property management flexibility. For example, increased utility, trash, and insurance costs will cause hardship on owners on property upkeep.
4. Discouragement of New Housing Development: The proposition could further deter developers from building new housing, exacerbating the existing housing shortage.

Conclusion

Proposition 33 represents a significant shift in California’s rental housing landscape, with far-reaching implications for property owners and renters alike. While it aims to address crucial issues of affordability and housing stability, its potential negative impacts on property values, market dynamics, and investment incentives make it a contentious proposal. By voting NO on Proposition 33, you can help ensure that California’s housing policies remain balanced and effective, supporting both property owners and tenants in the long term.