Despite Sky-High Rents, California Voters Reject Rent Control

It was supported by many city and county officials but opposed by Gavin Newsom, the newly elected Democratic governor.
by | November 7, 2018
Local advocates pushing for rent control and eviction protections hang up a sign in the courtyard of an apartment complex in Southern California. (TNS/Katie Falkenberg)

For results of the most important ballot measures, click here.

Despite skyrocketing housing prices in some parts of the state, California voters soundly rejected a ballot initiative to allow cities to set their own rent control regulations.

Nearly two-thirds of voters cast ballots in opposition to Proposition 10, which would have repealed a 23-year-old law that limits cities' power to enact rent control. The Costa-Hawkins Rental Housing Act of 1995 prohibits cities from applying rent control to housing built after Feb. 1, 1995 and to single-family homes and condominiums. It also allows landlords of rent-controlled properties to raise the rent when tenants move out.

The Los Angeles County Board of Supervisors, the state’s largest county governing body, came out in support of Prop. 10, as did prominent politicians like Los Angeles Mayor Eric Garcetti, who saw the issue as one in which they should have more authority.

"I've always believed that those who live closest to a given block or a street know what's best," he told the local NBC News station. "Local government should have control over their own city."

The state's Democratic Party endorsed the measure, but Lt. Gov. Gavin Newsom, the Democratic nominee for governor, opposed it.

"Getting rid of these protections overall may have unintended consequences on housing construction and production that could be profoundly problematic," Newsom said at a California housing conference in March.

He and other opponents of the measure said repealing the law would have taken away the incentive for developers to build, shrinking the supply of available housing and driving rents up in properties not under rent control.

But proponents of Prop. 10 argued that repealing the law would help drive down rents in a state where the housing market has been red hot. In Los Angeles County, rents have gone up an average of $500 since 2011, according to Reis, Inc., a real estate data firm. On average, Californians are spending more than 36 percent of their monthly earnings on housing. (Experts consider a household "cost-burdened" when housing consumes more than 30 percent of their income.)

Supporters also pointed out that half the residents in the state are renters, compared to the national average of 37 percent. Keeping rents in line with inflation would benefit the state’s long-term economic outlook, they say, by not pricing out workers and young families.

Research suggests that both sides were right, because the benefits of rent control are uneven.

According to a recent Stanford University study, rent control in San Francisco saved tenants in rent-controlled units between $2,300 and $6,600 since 1995 but simultaneously reduced the overall number of rental units on the market, drove overall prices up and worsened the affordability crisis.

And while the city's rent-controlled tenants are 10 to 20 percent more likely to remain in their apartment, landlords of rent-controlled units are more likely to take their properties off the rental market by either converting them to condominiums, tearing down the building to renovate or moving into the apartment themselves. During the study's more-than-two-decade time period, landlords took 15 percent of their properties off the rental market, which reduced rental property stock in the city by 5 percent.

The California Association of Realtors contributed $6.5 million in opposition to the ballot initiative. The AIDS Healthcare Foundation, which says the affordable housing crisis falls heavily on the clients they serve, pumped more than $23 million in support of it.

For results of the most important ballot measures, click here.