California's Proposition 33, appearing on the November 2024 ballot, seeks to repeal the Costa-Hawkins Rental Housing Act of 1995. This change would empower local governments to implement rent control on all types of housing, including single-family homes and newly constructed apartments. While intended to address housing affordability, Prop 33 may inadvertently exacerbate California's housing crisis by discouraging new development and reducing the overall housing supply.

The Impact of Rent Control on Housing Development

Rent control, though well-meaning, often leads to unintended economic consequences. By capping rental rates, developers and investors may find new housing projects less attractive, leading to a decline in construction. This reduction in new housing development can intensify the existing shortage, driving up prices and making affordability issues worse. The California Association of Realtors notes that Prop 33 "does nothing to build new housing and will reduce new construction of rental housing".

Potential Effects on Rental Properties

Expanding rent control to single-family homes and new apartments could result in several negative outcomes:
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- Reduced Investment: Investors may be less inclined to fund new rental properties due to diminished returns, leading to fewer housing options.
- Property Maintenance: With limited revenue, landlords might defer maintenance and upgrades, potentially leading to a decline in housing quality.
- Conversion to Other Uses: Property owners might opt to sell or convert rental units into condominiums, further decreasing the rental housing stock.

The Legislative Analyst’s Office indicates that Prop 33 could "reduce the supply of rental housing" and "lead to deterioration in the quality of rental units".

The Bigger Picture: California’s Housing Needs

California faces a significant housing shortage, with estimates suggesting a deficit of over a million units. The state's focus should be on policies that encourage the construction of new housing rather than measures that might hinder it. By increasing the housing supply, market pressures would ease, leading to more affordable options for residents.

Conclusion: Vote No on Prop 33 to Promote Housing Growth

While Proposition 33 aims to make housing more affordable by expanding rent control, it is likely to discourage new development and reduce the rental housing supply, ultimately worsening the affordability crisis. To effectively address California's housing challenges, policies should focus on stimulating new construction and increasing the overall housing stock. Voting no on Prop 33 supports this approach, encouraging investment in new housing and fostering long-term solutions to the state's housing needs.