Today I want to take a look at two propositions that are going to be on our November ballot: Proposition 5 and Proposition 10.
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As indicated by the California Association of Realtors, Proposition 5 and Proposition 10 are two ballot measures all Californians should be aware of. With that in mind, I want to share some basic information about what will appear on the ballot this November.
These two initiatives could dramatically affect housing opportunities, private property rights, and the availability of affordable housing.
Proposition 5 is California Association of Realtors' own initiative to create new homeownership opportunities by generating more sales of single-family homes in existing neighborhoods. California is facing a severe shortage of houses for sale, so this initiative is expected to greatly help young families. This property tax fairness initiative qualified for the ballot earlier this year, after nearly one million signatures were submitted to the Secretary of State's office.
This initiative will afford eligible people the ability to transfer their current property tax base to the purchase of another home in any of California's 58 counties. Proposition 5 will provide respite to seniors, many of whom are on fixed incomes, the disabled, and disaster victims by allowing them to move to a more suitable home for their needs. This is not only helpful to them, but also future generations who will be able to purchase these now-available properties.
The new property tax will be based on the original home’s assessment, and will also be subject to an adjustment of the difference in value between the sales price of the original home and the sales price of their new home.
The other measure is Proposition 10, also known as the “Affordable Housing Act.” Proposition 10 will actually make the housing crisis worse because it repeals the long-standing Costa-Hawkins Rental Housing Act, eventually allowing local governments to impose rent control.
These two initiatives could dramatically affect housing opportunities, private property rights, and the availability of affordable housing.
The California Association of Realtors strongly opposes this proposition because it will reduce the availability of affordable and middle-class housing. Experts from the University of Southern California, UC Berkeley, and Stanford all agree that it would drive up rents while discouraging new construction and reduce the availability of affordable and middle-class housing. Even the state's nonpartisan legislative analyst has found that passing this proposition will discourage new construction thus resulting in existing rental units being taken off the market and reducing availability.
Instead of renting properties to tenants, property owners will either sell their property or convert them into more profitable uses such as short-term vacation listings like Airbnb. This will increase the cost of existing housing and make it even harder for renters to find affordable homes.
Another side effect of this proposition, if it were to pass, according to the legislative analyst is that it will likely reduce the value of rental properties and single-family homes by driving down local property tax revenues by up to hundreds of millions of dollars per year. This will not only hurt middle-class families, but also reduce revenue for education, public safety, and roads.
Proposition 10 will also eliminate homeowner protections that we have enjoyed for over 20 years and lets the government dictate pricing for privately owned single-family homes. They will be able to control how much homeowners can charge to rent out their home.
Finally, in the event that a homeowner does take a property off the rental market, there could be surcharges.
If you have any additional questions about these propositions, please feel free to reach out to me. I would love to speak with you about them. And, as always, if you have any questions about buying or selling, don't hesitate to call or email. I look forward to speaking with you soon.
