Proposition 10 (2018) and rental property.

sgip

Well-known member
Wasn't sure if this thread should go under MIDTERM ELECTIONS thread or RENTERS board, so I'll try it here instead.

Any thoughts on Proposition 10? With a largely uninformed voting population ("Costa-Hawkins...what is that??....) , and expecting a "blue wave" peak in California, Proposition 10 has a very good chance of passing. If it does, and if it survives court challenges, might rental property in California see it's ROI diminish, or is this all much ado about nothing?

See link for more information

https://ballotpedia.org/California_Proposition_10,_Local_Rent_Control_Initiative_(2018)
 
If rent control coming to Irvine,  TIC is not going to be happy.
Even if this Prop 10 passed, rent control is not going to happen in Irvine.

I think if this Prop 10 passed, it will hurt rental supply even more.  Landlord can't make good money renting, they might just convert apartments into condos and sell it.  Also the developer will less likely to build rental units due to lower profitability. 

 
The big boy landlords are going to go to battle to keep this from getting passed, it'll be interesting to see what happens.  I have found that renters turn about once every 2 years here in Orange County so I wouldn't be too concerned about this from a private landlord standpoint.  The apartment guys will be more effected by this than us individual landlords.
 
It's a 15 to 1 cash ratio on this. The developers are certainly backing the "No on 10" effort in a bigly way.

Still, with a rent revolt bubbling, I could see this passing even with that kind of advertising cash arrayed against it. Remember, this may be Talk Irvine, but this is a Statewide Initiative. OC might vote "No", but LA and SD may swing "Yes"

For a recent example of a mass Rent Strike see:

https://www.presstelegram.com/2018/07/18/evicted-long-beach-tenants-are-fighting-to-stay/


For a big picture view see:

http://www.laweekly.com/news/will-rent-control-come-to-pasadena-long-beach-inglewood-and-glendale-8879562


If it does pass, then you've got the court issue, but with our present judiciary, and quiet backing from many politicians in Sacramento, this Proposition may still have legs yet.

My .02c
 
If it does pass, it would it still be up to local governments to draft up the actual level of rent control. OC is also not as Democrat dominant as other parts of California. I expect to see another dog fight locally if it does pass.
Even in rent control San Francisco there are cut off dates and exemptions for newer built homes. I would be shocked if there isn't when/if OC begins to do this.
 
won't happen in irvine - too much top level power in the rental industry as others have mentioned.

in other cities, i can see this putting downward pressure on home prices.  reduced investment property values due to lower returns, plus increased supply due to more people opting to rent.
 
People are stupid, so this will probably pass.  It is just like enacting a $15 min wage.  The sheeple vote for it cause everyone wants a bigger paycheck.  And then the jobs go away for many.  This is no different.  In the long run the housing supply will increase at a slower pace.  This will be great if you can find a place to live, but not so much when you can't.

Studies on rent control show that market forces will drive actual prices, whether legitimately or illegitimately.

USCTrojanCPA said:
I have found that renters turn about once every 2 years here in Orange County so I wouldn't be too concerned about this from a private landlord standpoint.

Expect people to behave differently to game the system when rent control is in place.  Depending on the way the law is written, chain tenancy could be used to keep the rents down for years.  It's as common as sunshine in the west la area.
 
daedalus said:
People are stupid, so this will probably pass.
That about sums it up.

I expect we'll have years of lead time: it has to pass the courts, the local laws have to be updated...plenty of time for condo conversions and for developers to cancel or alter plans for more multifamily housing.
 
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