Collins: Why Proposition 33 is bad for housing

Proposition 33 attempts to repeal the bipartisan Costa-Hawkins Rental Housing Act enacted in 1995.

The three key provisions of Costa-Hawkins were to stop the expansion of rent control to single-family homes, allow housing providers the opportunity to charge market rates when a tenant leaves and prohibit the imposition of rent control on buildings constructed after 1995. Proposition 33 is bankrolled by Michael Weinstein, president of the AIDS Healthcare Foundation. Voters have rejected similar measures from this same group in 2018 and 2020.

It is widely accepted that economists do not believe rent control is effective and feel it is a terrible idea. Rent control is often seen as a quick-fix solution for a complicated problem. Unfortunately, the unintended consequences are substantial.

Rent control can reduce the number of rental units available. Existing homeowners, if subject to rent control, could decide to sell rather than deal with excessive regulations. Properly maintaining your property can be almost infeasible under extreme rent control. New construction builds, which are already a challenge, could take a further dip. Proposition 33 does nothing to increase the housing supply, which is the real issue. The nonpartisan Legislative Analyst’s Office states Proposition 33 could result in higher rents for many, making the state even less affordable.

Proposition 33 infringes on homeowners’ rights by removing essential protections from rent control. Rent control can also lead to tenants staying in units longer even though their economic situation has improved substantially. This locks up affordable rental inventory for our lowest wage earners and marginalized populations.

It’s a much better strategy to provide assistance directly to those who need it most through a voucher system. Vouchers can also be used to stabilize tenants in housing that have experienced a sudden and unforeseen life event such as job loss or a medical situation. Increasing the housing supply has been and will always be the answer to lower housing costs. Reduction of red tape and delays at the local level would provide builders with more certainty and make it more feasible to build. Tax incentives at the federal or state level could also help increase production of housing at all levels.

One thing is for certain: Proposition 33 is a bad idea. Voters have rejected similar initiatives twice before. Let’s send a clear message this year by soundly defeating Proposition 33.

San José Spotlight columnist Neil Collins is CEO of the Santa Clara County Association of Realtors, a trade association representing more than 6,000 real estate professionals in Santa Clara County and surrounding areas. Contact Neil at [email protected].