As California continues to grapple with its severe housing shortage, Proposition 33 has emerged as a well-meaning but deeply flawed attempt to solve this crisis through rent control expansion. While the intent behind this proposition is noble—aiming to make housing more affordable—it misses the mark by ignoring the fundamental economic principles that govern housing supply and demand. Unfortunately, Proposition 33 will not only fail to alleviate housing affordability, but it will exacerbate the housing crisis California faces and will only serve to deepen the affordability gap and shortage of housing in the long run.
The Unintended Consequences of Proposition 33
At Hamilton Zanze, we've seen firsthand how policies that attempt to artificially control markets often lead to the opposite of their intended outcomes. Proposition 33 seeks to repeal the Costa-Hawkins Rental Housing Act, and it will allow cities and municipalities to implement sweeping rent control measures on virtually all residential properties. The reality is, Proposition 33 threatens to disrupt the delicate balance of housing economics and drive out much-needed investment in new and existing rental housing.
Rent control measures reduce the incentives for developers to build new rental units or invest in upgrading current housing stock. This is the last thing we need in a state that already faces a housing deficit of over 1 million units. Construction delays and higher development costs are already hindering the creation of new homes. Proposition 33 compounds these problems by discouraging investment in housing at every level—precisely the opposite of what is needed to solve California’s housing shortage.
Economics 101: The Importance of Supply
One doesn't need to be an economist to understand that restricting supply while demand continues to grow leads to higher prices. By allowing cities and municipalities to institute rent control, Proposition 33 limits the ability of landlords and developers to respond to market dynamics. The consequences of this are predictable: a reduced housing supply, deteriorating rental units, and, ultimately, even higher rents as competition for available units intensifies.
In fact, over 80% of economists agree that rent control is bad policy. From New York to San Francisco, we've seen rent control measures distort markets, suppress development, and degrade the quality of housing available to renters. If Proposition 33 passes, California risks repeating these mistakes on a larger scale.
A Better Way Forward
At Hamilton Zanze, we believe there are better, more effective, ways to address California’s housing crisis. Instead of implementing draconian rent control measures, we should focus on increasing the supply of housing through policies that incentivize development and streamline the regulatory and approval process for new housing. California’s recent success with accessory dwelling units and the Builder’s Remedy demonstrates that targeted measures encouraging development can yield meaningful results.
More important, we should also focus our efforts on helping those who need it most. Housing vouchers and targeted assistance programs are far more effective than broad-based rent control at ensuring affordable housing for low-income families. By allowing market forces to function while providing direct support to vulnerable renters, we can achieve a more balanced and equitable solution.
Conclusion
Proposition 33, despite its intentions, would only aggravate the very housing crisis it seeks to solve. By reducing the supply of affordable housing and increasing costs for both renters and property owners, it sets California back in its efforts to address housing affordability and supply. Instead of allowing municipalities to implement blanket rent control measures, we should focus on policies that encourage housing development and provide targeted support for those most in need. This proposition is not just misguided but harmful, and it will lead to long-term challenges that will be difficult to reverse. Let’s reject Proposition 33 and pursue real, sustainable solutions to California’s housing crisis.