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Dear Fellow Real Estate Professionals,
With the upcoming election, we thought it was timely to share information on key ballot measures that could impact our industry. This November, California voters will decide on two statewide propositions—Propositions 5 and 33—that, if passed, could have significant repercussions on real estate. In light of their importance, major industry organizations, including IREM, BOMA, CBPA (California Business Properties Association), and HJTA (Howard Jarvis Taxpayers Association), strongly recommend voting NO on both propositions. Here’s an overview of their positions:
Proposition 5:
Proposition 5 would reduce the two-thirds voter approval requirement to 55%. This change poses a serious threat to the voting power of California residents, especially regarding property tax decisions.
This proposition directly challenges the protections of Proposition 13. If Prop 13’s limitations on property taxes are removed, annual property taxes could soar, with no limit on yearly increases. Property taxes would be assessed at market value each year, leading to higher costs for both landlords and tenants. Smaller property owners and renters alike would feel the impact, as the increases will likely be passed down, straining financial feasibility. With about 41% of the nation’s 50 million rental units owned by mom-and-pop landlords (JP Morgan Chase, 2023), the stakes are high for these individual investors and the renters who rely on them.
Whether you’re a homeowner or renter, this measure affects you. Higher property taxes could make homeownership unaffordable for many, while renters may face significant rent hikes as landlords pass on the increased tax burden.
Here’s an excerpt from the Howard Jarvis Taxpayers Association on Proposition 5:
Vote NO on Prop 5: Proposition 5 (ACA 1) weakens Proposition 13 protections, allowing local bonds to pass with only 55% voter approval instead of two-thirds. This change could lead to ongoing increases in property tax bills, as more bonds for infrastructure and public housing would be funded by property tax surcharges. California already has the highest poverty rate when adjusted for living costs, and Prop 5 could further raise the cost of living across the state. You can use the HJTA Tax Calculator to see the potential impact on your property taxes without Prop 13 protections—a $1 million home in Southern California, for instance, would see an annual tax bill of $26,700.
Proposition 33:
Proposition 33 introduces a form of rent control that would reduce rental housing supply across California. This proposition repeals the 1995 Costa-Hawkins Rental Housing Act, a regulation that has been crucial in maintaining rental market stability and allowing property owners to earn a fair return on their investments.
If passed, Proposition 33 would enable cities to impose strict rent controls, even on single-family homes and condominiums, and prevent property owners from adjusting rent to market levels after tenant turnover. This regulation could halt new apartment development as lenders reconsider the financial viability of projects under such restrictive laws, worsening the housing shortage across California. It’s worth noting that voters have previously rejected this proposal twice, in 2018 and 2020. Vote NO on Proposition 33 to prevent adverse effects on housing affordability and availability.
For more information and to see the full recommendations, please refer to HJTA’s Ballot Measure Information & Recommendations on their website at hjta.org.
Thank you,
Linda Kight
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