California’s housing market faces significant challenges, exacerbated by proposed ballot measures that could threaten the state’s existing property tax and rent control regulations. While these measures are framed as solutions to housing affordability, they may ultimately lead to increased rents and diminished housing supply.
Constitutional Protections at Risk
Two of California’s key political advantages are its constitutional restriction on property tax hikes and the 1995 Costa-Hawkins Rental Housing Act, which limits local rent control. Proposition 5 and Proposition 33, set for a vote on November 5, seek to abolish these provisions. If passed, these propositions could destabilize the delicate balance of the housing market, discouraging investment and development.
Understanding Costa-Hawkins
The Costa-Hawkins Act prohibits local governments from imposing rent control on single-family homes and properties built after February 1, 1995. This statute ensures that landlords can set rental prices for new tenants and only restrict rent increases for current occupants. By safeguarding rental pricing, it encourages investment in new housing, which is vital given California’s persistent housing shortage.

The Cost of Housing Development
California’s stringent zoning regulations and lengthy permitting processes have made housing development prohibitively expensive. The cost of constructing a single low-income housing unit can exceed $1 million, and obtaining the necessary permits may take a decade. These challenges contribute to average rents that are approximately 50% higher than the national average, with cities like San Francisco seeing rents more than double that of other states.
Proposition 33 and Its Consequences
Proposition 33 aims to remove local rent control restrictions, ostensibly to improve housing affordability. However, this measure could have the opposite effect by introducing uncertainty for housing developers. Increased local rent control would likely discourage new construction, ultimately leading to reduced supply and higher rents for units not under local regulations.
Legislative Impact on Rent Increases
Since the introduction of rent control legislation in 2019, landlords have struggled to keep up with rising costs. The law restricts most landlords from raising rents beyond 5% plus inflation or 10% annually. This has made it difficult for many to recover losses incurred during the COVID-19 eviction moratorium, resulting in a decline in housing permits by approximately 15% in California.

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A Threat to Taxpayer Protections
Proposition 5 proposes lowering the supermajority requirement for local bond measures funding low-income housing to 55%. Consequently, this change could lead to irresponsible government spending. As a result, local governments may tap into taxpayer funds for initiatives that private investors avoid. Furthermore, lowering the approval threshold undermines the protections established by Proposition 13. This proposition caps property taxes at 1% of assessed value and limits annual increases to 2%. Thus, this change could potentially destabilize California’s housing market and financial landscape. Therefore, voters should consider the long-term implications of this proposal carefully.
A Call to Reject Harmful Measures
The Legislative Analyst’s Office projects that Proposition 5 could lead to a 20% to 50% increase in local bond approvals. Consequently, this situation may impose additional financial burdens on taxpayers across California. Moreover, polls indicate that voters are evenly divided on Propositions 5 and 33. Thus, both measures threaten to escalate housing costs for residents throughout the state. Californians should exercise their judgment and reject these measures. Ultimately, this decision will help protect the integrity of their housing market. Therefore, it ensures a more stable future for all citizens.
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