Real Estate on the Ballot: Propositions 5 & 10
November 1, 2018
The Statewide General Election is coming up in November, and there are a couple important ballot measures to consider which could have a significant impact on the real estate market. Below is a quick assessment of Propositions 5 & 10 on this year’s ballot:
Prop 5: Property Tax Transfer Initiative
Currently, under Props 60 & 90 homeowners over the age of 55 are eligible to transfer their property tax assessment to a new home if it is of equal or lesser market value to their current home. The transfer must also take place between participating counties (of which there are only 11). Prop 5 would expand the program to allow transferring your tax assessment to homes of greater market value anywhere in the state. It also extends the program to individuals with severe disabilities.
For people who live on fixed incomes, having to shoulder a stepped up property tax assessment could be a huge deterrent from moving, and might prevent them from moving closer to family or vital healthcare facilities. Allowing them to carry their tax assessment with them not only eliminates that concern, but it also helps facilitate better circulation in the real estate market. For these reasons, RealSmart recommends voting YES on Prop 5.
Prop 10: Repeal Costa-Hawkins Act
Passed in 1995, the Costa-Hawkins prevents cities from establishing rent control over single-family homes, condos, and new apartment buildings. It also prohibits vacancy control, which restricts a landlord’s ability to raise rent even when a new tenant moves in.
Repealing the Costa-Hawkins Act would add fuel to many local rent control battles, and allow cities to craft even more restrictive policies. Cities where rent control already exists, like Los Angeles and Berkeley, are already thinking of ways to expand their ordinances should Prop 10 pass.
We’ve detailed RealSmart’s stance against rent control ad nauseam in previous newsletters, but in short – it infringes on private property rights, puts the burden for providing affordable housing on private property owners, and has actually been proven to increase market rents in the long run. For these reasons, RealSmart recommends voting NO on Prop 10.