Why Voting No on Prop 33 is Crucial for Property Owners fighting Rent Control
As a real estate investing expert, I absolutely oppose rent control, I feel compelled to address the critical issue of Proposition 33, dubbed “The Unjust Housing Destruction Act” by its opponents. This measure poses a significant threat to property rights, the rental market, and the overall health of our housing ecosystem. Let’s delve into why voting no on Prop 33 is essential for both property owners and the long-term stability of our communities.
The Power of Real Estate Investing
Before we examine the specifics of Prop 33, it’s crucial to understand why real estate investing is such a powerful tool for building wealth. Property ownership allows individuals to:
- Build equity over time
- Generate passive income through rentals
- Leverage assets for greater returns
- Hedge against inflation
- Create generational wealth
Owning property is something everyone should strive for, as it provides financial security and opens doors to numerous opportunities. However, measures like Prop 33 threaten to undermine these benefits and discourage investment in rental properties.
The Devastating Impact of Prop 33
Prop 33, if passed, would introduce severe rent control measures that could have far-reaching consequences. Here are some key points to consider:
- 1
Loss of Housing and Jobs: Studies from Harvard, Stanford, and the Rand Corporation all agree that property controls cause a loss of housing and jobs.
- 2
Massive Costs: It could cost state and local governments up to over a billion dollars annually, leading to more taxes for everybody.
- 3
Affordable Housing Destruction: Instead of creating more affordable housing, it may actually cause the destruction of existing affordable units.
- 4
Forced Evictions: It could force renters out of their homes as apartments are converted to condominiums and short-term rentals.
- 5
Increased Homelessness: A potential huge increase in the homeless population could result.
- 6
Intrusive Inspections: It could allow “inspectors” into your single-family home to decide if you are living up to their standards.
- 7
Unelected Officials’ Power: It would give unelected government employees unlimited power to assess fees on single-family homes and ADUs.
- 8
Sky-High Housing Costs: It would further drive the cost of housing and rents sky-high, worsening the housing crisis.
- 9
Government Cost Increases: Prop 33 could increase costs for local government by tens of millions of dollars.
The Impact on Small Landlords
While large corporate landlords might weather the storm, small business owners and mom-and-pop landlords will be hit hardest by Prop 33. These individuals, who often rely on rental income for their livelihoods or retirement, shouldn’t be forced to subsidize another person’s lifestyle. Many small landlords operate on thin margins and use rental income to cover mortgages, property taxes, and maintenance costs.
Long-Term Effects on Rental Income
To illustrate the potential long-term impact of rent control, let’s examine a hypothetical scenario:
| Year | How It Might Be Today | With Vacancy Control |
|---|---|---|
| 2015 | $1,500 | $1,500 (starting/mkt rent) |
| 2016 | $1,537 | $1,537 (1,500 x 2.5%) |
| 2017 | $1,576 | $1,576 (1,537 x 2.5%) |
| 2018 | $1,615 | $1,615 (1,576 x 2.5%) |
| 2019 | $1,655 | $1,655 (1,615 x 2.5%) |
| 2020 | $1,914 | $1,696 (1,655 x 2.5%) |
As you can see, the potential loss for a landlord could be $2,616 a year on just one unit. This compounds over time, significantly impacting a property owner’s ability to maintain and improve their properties.
The Mismatch Between Rent Control and Rising Costs
Rent control price fixing does not keep up with the increase in material costs for maintenance, labor costs, and insurance costs. While rents are artificially suppressed, landlords face ever-increasing expenses, including:
- Rising material costs for repairs and renovations
- Increasing labor costs for maintenance and management
- Skyrocketing insurance premiums
- Property tax increases
This mismatch can lead to deferred maintenance, reduced property values, and ultimately, a decline in the quality of available housing.
The Threat to Property Rights
Prop 33 represents a significant infringement on property rights. “Some day you will beg us to take your property.” This ominous quote from a tenant leader highlights the potential end game of such policies – the gradual erosion of private property ownership.
Conclusion: A Call to Action
The passage of Prop 33 could lead to a devastating drop in apartment values, potentially 30% to 40% after November. This would not only harm property owners but could also destabilize the entire housing market.
As real estate investors and property owners, we must stand united against this unjust and economically unsound proposition. Rent control has been proven time and again to be an ineffective solution to housing affordability. Instead, it creates market distortions that ultimately harm both landlords and tenants.
I urge you to vote NO on Prop 33 and to educate your friends, family, and tenants about the dangers of this misguided policy. Let’s work together to find real solutions to housing affordability that don’t come at the expense of property rights and economic stability.
Remember, a thriving rental market benefits everyone – it provides housing options for tenants, investment opportunities for owners, and contributes to the overall economic health of our communities. Don’t let Prop 33 destroy what we’ve worked so hard to build.
