Why You Should Vote No on California Proposition 33, Prohibit State Limitations on Local Rent Control Initiative (2024)
As Californians prepare to vote on various propositions in the 2024 election, one measure that is drawing significant attention is Proposition 33, which aims to overturn more than 100 state housing laws and weaken the strongest statewide rent stability law in the nation. This would open the door to permanent price controls, even on single-family homes and condominiums. At first glance, the idea of expanding rent control may seem like a straightforward solution to California’s housing crisis. However, a closer look reveals several reasons why voting no on Proposition 33 is the right decision.
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Rent Control Does Not Solve the Housing Crisis
One of the main arguments in favor of Proposition 33 is that rent control will protect tenants from rising rents. While this may sound appealing, rent control does little to address the root cause of California’s housing crisis: the lack of affordable housing supply.
Restricting how much landlords can charge might provide temporary relief for some tenants, but it discourages investment in new housing and leads to a long-term decrease in available rental units. Landlords may convert rental properties into condos or other types of housing that are not subject to rent control, exacerbating the shortage of affordable rentals. If we truly want to solve California’s housing crisis, we need to focus on building more housing, not adding restrictive policies that deter investment.
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Reduces Incentives for New Construction
Rent control has historically led to reduced incentives for developers to build new rental housing. Under Proposition 33, local governments would have more freedom to impose or expand rent control, potentially making it more difficult for developers to justify the high costs of construction.
California already has some of the highest construction costs in the country, and rent control would only add another layer of uncertainty. With less financial incentive to build, developers may turn to other states or choose to build fewer housing units, further restricting California’s already limited housing supply. In the long term, this will hurt renters, as fewer rental units mean more competition for available housing and potentially higher rents for those units that are not under rent control.
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Negative Impact on Small Landlords
While large corporate landlords often have the financial means to absorb the costs of rent control, small, “mom-and-pop” landlords may not be able to do so. Many smaller landlords depend on rental income to pay their mortgages, maintain properties, and cover expenses. If they are unable to raise rents to keep up with inflation, property taxes, or maintenance costs, these landlords may be forced to sell their properties or neglect maintenance.
This could lead to a decline in the quality of housing stock, as landlords struggle to keep up with repairs and upkeep, potentially harming tenants in the process. Proposition 33 could disproportionately hurt small landlords who play an essential role in providing housing to Californians.
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Rent Control Favors Existing Tenants at the Expense of New Renters
Proposition 33’s rent control policies may provide some protections to existing tenants, but it can have unintended consequences for new renters. When rent control is implemented, landlords are less likely to make units available to new tenants and may favor tenants who they perceive as less risky. This can lead to housing discrimination, where landlords avoid renting to people who they believe might not be long-term tenants.
Furthermore, rent control creates an imbalance in the market, where long-term tenants benefit from below-market rates, while new renters face higher rents for the few available units. This dynamic exacerbates the housing crisis by making it even more difficult for new renters—especially younger individuals and those moving to California for work—to find affordable housing.
While Proposition 33 may seem like a quick fix for California’s housing affordability problems, it ultimately creates more problems than it solves. By discouraging new construction, reducing incentives for landlords to maintain properties, and distorting the rental market, rent control will only worsen the state’s housing crisis in the long term.
The real solution to California’s housing challenges lies in increasing the supply of affordable housing, encouraging responsible development, and offering targeted assistance to those who need it most. For these reasons, voting no on Proposition 33 is the right choice for a better future in California and your real estate investment.
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