Proposition 10 could have a very real impact on the housing market and home owners who rent out heir properties. What is Proposition 10? This coming November voters will go to the polls to vote for or against local governments being able to establish rent control ordinances. Property owners would be restricted in the amount they could rent their properties for.
The “Costa-Hawkins Rental Housing Act” is a California law established in 1995. The law put limits on government efforts to impose rent control ordinances on certain types of residential units; single family detached homes, condominiums and newly constructed multi-family residential are deemed exempt. In addition, the law prohibits municipal vacancy control.
Proposition 10 would repeal the Costa Hawkins Act. If Proposition 10 passes the California State Legislature this coming November, the real estate market will be negatively affected. Prop 10 could mean big changes for both landlords and tenants. Currently, if a tenant moves out, the landlord is permitted to raise the price of the unit in line with the rental market. Property owners bear the burden of maintaining and doing repairs on the property. Being able to adjust the rental price is an important part of managing rental properties.
The state’s housing crisis is real. The problem is a housing shortage, not enough supply for an increasing demand. Our housing market is already unstable for both property owners and renters. Creating more restrictive laws would just make things worse. We need to protect both the landlords as well as the tenants.
Finding a safe and affordable place to live has become increasingly difficult for too many people; low income and middle class families, students, and those new to the rental market are faced with huge challenges. Housing prices also affect business owners who employ these struggling renters. Employees routinely spend over half of their income on rent, far more than the national average.
Proposition 10 is not a remedy to California’s housing crisis.
Builders are willing to develop dense housing projects, multiple unit dwellings and low income designations for those who qualify. But, many Californians are against increased building because of their affects on the environment and quality of life in our communities. Increased traffic, crowding, water supply issues negatively impact our communities.
Those opposed to Proposition 10 include the State Building and Construction Trades Council of California. Proposition 10 would create a poor incentive for investors seeking to build new homes. This will, in turn, negatively affect the housing supply in California.
The passage of Proposition 10 would increase the gap between low income and middle class families. Many landlords will be driven out of the rental market because of the financial burden. Property values will be at risk; a 30% decline is estimated. The bill would influence the housing market in the long term. Contractors and investors are putting their current and future work on hold until after November to see how this all plays out.