How Prop. 21 Hurts Affordable Housing Availability

Proposition 21, also known as the Local Rent Control initiative, is on the ballot this election for Californian voters to decide whether or not rent control should be allowed on specified rental units.

The measure would allow local governments in California to apply rent control to housing units that were first occupied after February 1995, excluding single family homes, condominiums, and units whose landlords are of a “mom-and-pop” size (owning less than three housing units).

The California Building Industry Association (CBIA) recommends that Californians vote no on Proposition 21, likely because rent control measures may hinder the production of new affordable housing units. Builders and landlords may not see a return on their investments if rent control is implemented on newer housing, possibly deterring building projects. In addition, credible studies have shown that rent control measures have correlated with less affordable housing availability in California, which may ultimately worsen the state’s housing crisis.

Gimme Shelter, a reputable podcast on California housing issues, recently explored the arguments for and against Proposition 21 on their latest episode: “The rent control initiative, with the ‘Yes’ and ‘No’ side.” Although the episode did not endorse any particular stance, the hosts brought up strong arguments that shed light on how Proposition 21 may hurt affordable housing availability.

“Economists… generally are pretty uniformly, including liberal economists, against the idea of rent controls because they believe limits on prices landlords can charge will lead to fewer houses being produced, therefore driving up prices,” argued podcast host Liam Dillon of the Los Angeles Times, assuming the role of a Proposition 21 opponent. Dillon proceeded to referenced a 2019 study conducted by three Stanford economists who found that rent control efforts in San Francisco ultimately reduced the supply of affordable rental housing. According to the study, rent controlled buildings were 8% more likely to convert into condominiums than non-rent controlled buildings; the result of a loophole landlords found to evade the city’s rent control laws. This in turn led to overall price increases for housing in San Francisco.

Should Proposition 21 pass, this effect would likely follow suit in cities all across California. Steve Maviglio, a spokesperson for the “No on 21” campaign stated during his interview on Gimme Shelter that a top builder in Sacramento expressed inclinations to take similar actions to the landlords in San Francisco if the proposition were to pass.

Overall, evidence suggests that rent control could hurt housing availability in the long run. It disincentivizes builders and drives many landlords to convert affordable housing units into expensive condominiums, which is why it is advisable that Californians vote no on Proposition 21.

Marissa Saldivar // CIRB Journalism Intern //