Can a New Duplex Owner Terminate Month-to-Month Tenants in the City of Sacramento?

I recently spoke with an aspiring real estate investor who was considering purchasing a duplex in Midtown Sacramento. Both units were occupied by long-term tenants (long term = occupied the unit for more than one year) on month-to-month rental agreements. His plan sounded pretty straightforward: purchase the property, give the existing tenants notice, furnish the units and operate them as short-term rentals. Interesting idea. But there was an important wrinkle: Just because a tenant is month-to-month doesn't necessarily mean a new owner can simply give them notice and ask them to leave.

Buying the property doesn't eliminate or void the existing tenancy. And this is an especially important consideration when purchasing an occupied multi-family duplex, triplex or fourplex within the City of Sacramento due to their Tenant Protection Program. 

Buyers naturally spend a lot of time analyzing the real estate itself. What is the condition of the roof? How old is the HVAC? What are the operating expenses? Does the property need updating? But with an occupied investment property, the tenants and their tenure in the unit are every bit as important. I sometimes put it this way: you're not just buying the building. You're also buying the existing tenancies. And those tenancies can directly affect what you're able to do with the property after closing. 

But what if the tenants are month-to-month? This is where investors can get tripped up. It's easy to hear "month-to-month" and assume that means the tenancy can simply be terminated with appropriate notice. But rental units covered by the City of Sacramento's Tenant Protection Program can have just-cause eviction protections once a tenant has occupied the property for more than 12 months. In other words, the expiration of an original lease and conversion to a month-to-month rental agreement doesn't necessarily eliminate the tenant's protections. 

A landlord generally needs a legally recognized "just cause" to terminate a protected tenancy. Some qualifying "just cause" reasons involve actions by the tenant, such as failure to pay rent, certain breaches of the rental agreement, nuisance or criminal activity, or failure to provide lawful access. 

There are also certain circumstances that don't necessarily involve wrongdoing by the tenant. These are sometimes referred to as "no fault evictions" and can include an owner move-in, withdrawal of the unit from the rental market, or necessary and substantial repairs requiring temporary vacancy. But simply purchasing a property and preferring to have it vacant is not, by itself, the same thing as having a qualifying just cause. 

Why this matters to your investment strategy? Go back to the duplex this potential buyer was considering. His entire investment plan depended on terminating the existing tenancies and taking possession of both units after closing. That makes the status of those tenancies more than a minor due-diligence question. It's fundamental to whether his proposed investment strategy will work at all.

Maybe you want to buy a duplex and live in one side. Maybe you plan a significant renovation. Maybe you're buying a property for another family member to occupy. Or maybe, like this investor, your plans for the property are completely different from the current owner's use. Whatever the goal, if your plan requires an existing tenant to leave, you should understand whether you can legally accomplish that before you purchase the property.

This is also an area where I encourage clients to consult a qualified landlord-tenant attorney. As a Realtor, I can help identify the real estate issues we should investigate and obtain information about the existing tenancies, but determining whether a particular tenancy can legally be terminated is a legal question. 

And we're specifically talking about the City of Sacramento. Here's another detail that can easily cause confusion. The City of Sacramento's Tenant Protection Program applies within Sacramento city limits. That is a specific governmental jurisdiction. A property having "Sacramento, CA" in its mailing address does not necessarily mean it's located within the incorporated City of Sacramento. There are large areas around Sacramento that people commonly refer to as Sacramento, and that may even use Sacramento as their mailing city, that are actually located in unincorporated Sacramento County. That distinction matters because local ordinances can be different depending on which jurisdiction the property is actually located in. Some areas that are NOT in the city limits with a Sacramento mailing address include the Arden-Arcade area, Foothill Farms area, South Sacramento area, Rosemont area, most of the College Greens area, most of the Sierra Oaks area, etc.

So if you're considering purchasing an occupied rental property, don't make assumptions based solely on the mailing address or ZIP code. Verify the property's jurisdiction. And remember that properties outside Sacramento city limits may still be subject to California state landlord-tenant laws and other applicable protections. Being outside the City simply means that this particular City of Sacramento ordinance may not apply. 

But the moral of the story is to understand and be familiar with the basics before you buy. When evaluating an occupied multifamily property, I want to know more than the number of units and what the building looks like. How long has each tenant lived there? Are there written leases? Are they month-to-month? What documentation has the seller maintained? Are there agreements or notices that a buyer needs to know about? Is the property within Sacramento city limits? Is it subject to the City's Tenant Protection Program? Do other protections apply? And perhaps most importantly: Does your plan for the property depend on one or more of the existing tenants leaving? If the answer is yes, that's something to investigate early. There can be tremendous opportunities in Sacramento duplexes, triplexes and fourplexes. But with an occupied property, understanding exactly what you're buying means understanding both the real estate *and* the ramifications of the tenancies that come with it.

It is worth noting that this post is intended to provide general real estate information and is not legal or tax advice. California landlord-tenant law and local tenant protections are complex and can change. Buyers, sellers and property owners should consult a qualified landlord-tenant attorney regarding a particular property or tenancy.

Sacramento Landlords: When Holding a Single-Family or Small Multifamily Rental Stops Making Sense

It's January! The holidays are behind us. The calendar has flipped to a new year...and this week I found myself having a familiar conversation: a Sacramento multifamily property owner called me and wanted to talk through "if it still makes sense for me to own this rental property". For this person, the short answer was NO. And perhaps at some point I will list this property. 

I hear this most often from owners of single-family rental homes, and owners of small multifamily properties like duplexes, triplexes, and fourplexes. These guys are not institutional investors. They’re what we refer to commonly as "mom and pop investors" -- meaning regular people who bought with a long-term plan in mind: retirement income, cash flow, or long-term wealth building. And let's face it, for a long time, that plan has worked well. 

But heading into 2026, perhaps the calculus has shifted. 

• Maybe they talked to their CPA and some of the tax advantages of owning rental investment property have run their course. Depreciation is usually part of this conversation. Many long-term rental owners are nearing full depreciation, meaning the tax advantages that once made ownership especially appealing are starting to fade. When those benefits diminish, it often prompts a closer look at whether continuing to hold still makes sense. 
• Maybe they are considering retiring and riding off into the sunset in their RV and owning rental property in Sacramento is not something they want the responsibility for. Some landlords begin to wonder whether keeping that equity locked inside a rental property is still the best use of their capital. For landlords approaching retirement there is often a shifting desire for liquidity and simplicity. Selling a rental property can provide funds to support retirement, reduce risk, and eliminate the day-to-day responsibilities that come with being a landlord. 
• Maybe they already live outside of the area and coordinating repairs and keeping up with tenant issues from a distance is too much to manage. Absentee owners, in particular, may decide it’s time to cash in, simplify their lives, and redeploy the proceeds toward other investments, lifestyle goals, or greater financial flexibility. 
• Maybe a tenant has stopped paying rent and they are faced with an expensive eviction, and just do not want to deal anymore. Or perhaps a tenant has provided notice to vacate, and it proves to be an opportune time to sell rather than re-rent the property. 
• Maybe they want to help their adult kids buy their first home, and selling the old rental property is the perfect vehicle for a tax deferred 1031 Exchange. A lot of my clients are considering how to help their adult kids become homeowners and maybe give them the inheritance a little early. 
• Maybe expenses like insurance premiums are increasing, or there are some anticipated large repair expenses looming due to some deferred maintenance. A new roof, a new HVAC, a new sewer line, dryrot or termites...these can be big ticket items if a housing provider does not have liquid reserves set aside. 
• Maybe they aren't excited with the direction the California legislature is going with tenant protections and the ever-evolving regulatory landscape, and they are over it. In the last few years, California has enacted AB1482 rent caps and just cause eviction, has limited the amount a landlord can charge as a rental deposit, and has now required landlords to provide refrigerators and stoves as a condition of habitability. 
• Maybe they never intended to be a landlord in the first place! They inherited the property, or maybe couldn't get the price they wanted when they moved out of the property and decided to rent it out. 

You get the idea. 

Every year I have these conversations with property owners looking to go out of the rental business. That naturally leads to questions about opportunity cost. What am I currently not doing that I could be doing if the equity in this property were liquid, or if I weren't tied down? In the Sacramento market, single-family rentals and 2–4 unit properties continue to attract strong buyer interest. Buyers include owner-occupants planning to live in one unit and rent the others, as well as long-term investors looking for stable, well-located assets. Properties with solid fundamentals remain in demand. 

Reach out and I am happy to talk it through with you, analyze your income and expenses, the rental market and scenario, and to give you a sense of what your property might be worth.

Proposition 33: VOTE NO

Let me clear up misperceptions about Proposition 33: VOTE NO. It is a deeply flawed rent control initiative that will hurt both California's renters and housing providers. Despite some confusion I’ve seen and heard about what this measure would do, let me be crystal clear: Prop 33 would dismantle key protections under the 1995 Costa-Hawkins Rental Housing Act (passed by the California Legislature) and lead to harmful consequences for the housing market. 

Here’s why you should vote NO: 

(1) Prop 33 would cripple development of new rental properties: Prop 33 would allow rent control on properties built after 1995. Right now, Costa-Hawkins prevents rent control on newer buildings, so that developers continue to invest in creating rental housing. If Prop 33 passes, rent control could be imposed on all properties, even new construction. Why would any developer build in California if their units could be immediately subject to rent control? This will absolutely bring development of new rental properties to a screeching halt, worsening the housing crisis. How would this be good for anyone? 

(2) Prop 33 would eliminate fair rent adjustments after a tenant moves out: Under Prop 33, housing providers would no longer be able to raise rents to market rates after a tenant moves out. Currently, Costa Hawkins allows "vacancy decontrol" which permits rents to be reset to a market-rate when a tenant vacates a unit. This ensures housing providers can cover costs like renovating the unit, maintenance, and the rising costs of property taxes and insurance. Without this, providers will absolutely struggle to keep up with the increasing costs of maintaining their properties and keep up with inflation, leading to financial strain and fewer rental options as these housing providers decide to go out of business. How does that help tenants? 

(3) Prop 33 would hurt “mom and pop” property owners: Prop 33 would even allow rent control to be applied to single-family homes, which are currently protected under Costa-Hawkins. This move would further discourage single-family homeowners from renting out their properties, shrinking the already limited rental market and reducing housing options for families. I’ve personally talked to several rental homeowners who are fearful of Prop 33 passing and would sell these homes immediately - which would take these rental homes off the rental market. How’s that good for tenants? 

Prop 33 is literally a recipe for disaster. It will stifle new housing development, punish housing providers, and ultimately lead to fewer (not more) rental options for Californians. We are currently over 3 MILLION housing units short of what we need in California according to the California Department of Housing & Community Development. Let’s focus on fixing our severe housing shortage and on BUILDING MORE PLACES FOR PEOPLE TO LIVE. Please - vote NO on Prop 33.

Per the California Apartment Association: AB 1482 allowed rent increase is set at 10% statewide

If you are a landlord of a property that falls under the requirements of California AB1482 (2020 Tenant Protection Act), the California Apartment Association (CAA) has released the allowable rent increase numbers based on the current consumer price index calculations for different areas in the state.

Statewide, CAA has determined that the allowable rent increase for properties that fall within the requirements of AB 1482 to be 10%. This is not surprising considering inflation numbers are globally pretty high right now.

California AB 1482 limits rent increases in any 12-month period to "no more than 5% plus the percentage change in the cost of living (CPI), or 10%, whichever is lower". For increases that take effect on or after August 1, 2022, due to inflation, the California Apartment Association has noted that all of the applicable area's CPIs are 5% or greater. So with that, the allowable rent increase is 10%. Until they re-evaluate things...so if you are reading this well after today (June 16, 2022), best to make sure this information is still relevant.

There are many types of residential rental properties that are included and excluded from the rent cap and just cause eviction requirements of AB 1482 (and for added fun, in some areas rent control ordinances supersede AB 1482) -- so if you have questions, CAA is a great source of information, or may wish to consult a professional property manager or an attorney. 

New Listing - 2717-2719 59th Street, Sacramento, CA 95817

Great investment property opportunity awaits you in Tahoe Park! Convenient, high-demand location in an ideal spot -- just a quick hop skip and a jump from Tahoe Park and its playground, sports fields, and swimming pool AND on a road that is quick jaunt directly into East Sac! The best of both worlds! Front unit is a 2 bedroom/1 bathroom floorplan, with central heat & air, big bedrooms, spacious living and dining areas, wood floors, lots of closet space, and indoor laundry hookups. The rear unit is 2 bedrooms/1 bathroom, formal entry area, wood floors, big bedrooms, central heat & air, large private/fenced backyard with lots of sunny space to garden. Detached 2-car garage has 2 separated parking bays, and a side storage closet area. Property backs up to the 59th Street-2nd Avenue Alley! The possibilities are endless. Close proximity to public transportation, shopping, restaurants, schools, freeways, Sac State, UCDMC, the future planned development at Aggie Square, and more! Don't wait! Inspection reports and income/expense information available. Offered at $449,900. For more photos and detail, please visit 2717-2719 59th Street, Sacramento, CA 95817.

Erin, where are all the homes that should be for sale in Sacramento?

I was quoted in a Sacramento Bee article last week, that among other things discussed the imbalance of supply of homes for sale and demand to purchase homes. I was quoted in the article saying "At some point there is going to be this backlog of sellers who have forgone selling. We are going to see those people put their houses on the market."

BUT WHEN?

That is a fabulous question. I thought I'd take a minute to describe some of the things I have been hearing from my clients, as well as some of the bottlenecks and challenges sellers have in this environment. At some point the trickle of new listings will be a little more steady, but we have some things to work through in our Sacramento real estate market.

(1) Some sellers still do not feel safe having buyers in their homes. Some homeowners who want to sell have a higher or lower risk tolerance than others. While the COVID19 vaccine has recently become more widely available, it will still be several months before the majority of the population in our region has been fully vaccinated. And cautious sellers who fear catching COVID19 have been staying put. I have conversations with would-be sellers in this category all the time. It does seem like there is a light at the end of the tunnel, but every would-be seller will have a different comfort-level here.

(2) The court systems have been backed up. You may not realize how many transactions are dependent on court orders or other legal processes. For example the probate court system, which governs who will manage the estate of a deceased person, was closed for a few months. There is a tremendous case backlog, and those who will ultimately decide if and when to sell a home that was owned by someone who died are not able to manage the estate affairs without a court order. I have one client who filed for probate back in the summer 2020 who was just recently finally granted authority to handle his father's estate. Courts also often weigh in on the sale of homes in divorce/family law and bankruptcy cases too.

(3) There is an eviction moratorium and various "just cause" ordinances in place preventing landlords from displacing tenants. While I feel for the plight of tenants who face a COVID19-related hardship, there are property owners who would love to sell if they were able to end the tenancy of their current renters. It is often challenging to sell a home with tenants for a variety of reasons. I was contacted by a single-family homeowner last year who had a non-paying tenant, and ultimately they were advised by their attorney that they could not evict the tenants and should not try to sell until the tenants were either paying rent or move out. 

(4) There is a moratorium on foreclosures. While we have been in an increasing price market for a while in Sacramento and distressed property listings (short sales and foreclosures) account for a very small fraction of listings, these listings are not coming on the market as quickly. (4b) Homeowners who are unemployed or under-employed are propped up by federal stimulus, additional pandemic unemployment insurance income, and loan forbearance. At some point, some of these homeowners will sell when the federal assistance expires.

(5) It can be a little more difficult to prepare a home for sale. I have spoken to many contractors are reluctant to work on occupied homes. For those that do, their schedules tend to be booked out for weeks or months. Some organizations have stopped taking certain donated items, so clearing out the house can take longer. Many building materials, supplies, and appliances have become scarce and can be difficult or expensive to obtain. (I personally am still waiting for delivery of a new cooktop I ordered in early March. I will be lucky to have it by the end of May according to the supplier. No it is not stuck on the Ever Given!)

(6) Where will the seller move once they sell? In this low inventory environment for both purchasing AND renting homes, sellers often express concern that if they sell their home they may not be able to purchase or rent something else. Not every seller has an easy move-out plan. I easily have 8 would-be sellers who would list tomorrow if they were confident in finding a replacement property. There are still plenty of ways to work through this, but some of the options can be a little stressful for risk-averse sellers/buyers.

So hopefully this is informative. And as I was quoted in the Sacramento Bee article -- at some point sellers who have not listed their homes WILL sell. I have a queue of many people who very much want to sell. And at some point we will see those homes come to market. There are ways to work within many of these challenges with a little creativity and determination. I am still listing plenty of homes...

The good news is I am seeing a little more inventory as we inch more into the spring. This is the time of year when we normally see more listing inventory...and I can only hope it takes some of the upward pressure off the market for home buyers, as the current trajectory of the market is not sustainable for the long term. but we all know there is less that is the normal we are all used to. 

New Listing - 3498-3950A-3950B Sherman Way, Sacramento, CA 95817

Amazing renovated 3-unit / triplex investment property opportunity near UC Davis Medical Center! You will appreciate the attention to detail and recent renovation. Front unit (3948) is a spacious 2/1 with a sunny front porch, light and bright with lots of windows, built-ins, updated kitchen with a Wedgewood stove, updated bathroom bathroom. Rear unit (3950A) is an adorable 3/1 with a downstairs bedroom and bath, and 2 fun attic bedrooms with skylights and cool nooks and crannies! Also features a quarter basement, updated kitchen with new quartz counters. ADU unit (3950B) is an efficient 1/1 that is newly built and has lots bells and whistles, including new kitchen with stainless appliance, new bathroom, a minisplit a/c, breezy rear deck. All units have new dual pane windows, refinished or new flooring, fresh interior/exterior paint, new light fixtures. Landscaped yard and planter boxes. Disclosures, income/expense statements available. 5.8% estimated Cap Rate, 13.14 estimated Gross Rent Multiplier. Offered at $875,000. MLS# 20031999. 3D Virtual walk-through and more photos and detail available at 3498-3950A-3950B Sherman Way, Sacramento, CA 95817.

In addition to City of Sacramento's rent control ordinance, for more fun, now we have statewide rent control in California as AB1482 is signed into law...

I have been holding off pushing the "publish" button on this post until California's Governor Gavin Newsom actually signed AB1482 into law, and since he finally did so yesterday, here you go.

California now has a statewide rent control and just cause for eviction. And nearly simultaneously as I wrote about a few weeks ago, the City of Sacramento passed a local rent control ordinance that is essentially rolling out at the same time.

I am not looking forward to the confusion these two parallel rent control programs will cause in and around Sacramento. The provisions in both are similar, yet different. And while I am not an attorney, I imagine that within the city limits of Sacramento where the terms overlap, the higher level of tenant protection will prevail.

AB1482 statewide rent cap limits annual rent increases to 5% + regional CPI (inflation adjustment), applies to newer construction on a rolling 15-year basis, and after tenancy for one year provides for relocation assistance in the amount of one month's rent to terminate a tenancy (this is known as just cause for eviction).

So for example, within the city limits of Sacramento, while single family homes are exempt from the local rent control ordinance, because the statewide rent control applies single family homes owned by larger investors (LLC's owned by corporations, or individuals who own more than 10 properties), some single family homes in the city may be rent controlled by the new state law. Additionally, the state rent cap allowable increase percentage is actually LOWER than the city's...so I imagine the lower of the two will be what goes.

So basically, it's complicated. If you care to read it, here is the bill language for AB1482, as well as the ordinance for the City of Sacramento.

In addition, landlords will be required to provide their tenants a disclosure about their rights under the new ordinance by January 1, 2020. The California Association of REALTORS is coming out with a standard form for this, and I imagine the California Apartment Association will too, among other rental housing organizations...if you have a professional property manager you should inquire to make sure they are ready to be in compliance with this requirement. And if you self-manage your properties, you should perhaps get some legal advice.

If you are thinking about selling an investment property or any tenant occupied property, please connect with me so we can strategize the best way to move forward in compliance with these rent control ordinances.

Regardless of your stance on rent control policies, these are here to stay for a while. The state law sunsets December 31st, 2030, which is more than a decade away...

City of Sacramento passed a rent control ordinance -- here are the basics...

The City of Sacramento passed a new rent control ordinance last month that will be rolling out very soon. I think there may be confusion among local landlords and tenants alike as this is implemented. This ONLY applies within the city limits of Sacramento, which is a very specific area...there are areas within the unincorporated county of Sacramento where the ordinance will not apply, and there are many residents of those areas who do not realize the difference between city and county jurisdiction. Here is a map of the affected areas:

I think confusion will be highest in areas with Sacramento addresses that are outside of the city limits. For example parts of town such as the Arden / Arcade areas, some parts of Natomas, areas near the Oak Park neighborhood, Rosemont, South Sacramento, Foothill Farms, etc all have Sacramento addresses but are actually located in the unincorporated county though are adjacent to the city limits. Those areas are not affected by this rent control ordinance.

If you have trouble sleeping, you can read the full text of the adopted ordinance here. Here are the highlights of the new ordinance that will be in effect in the coming week:

• Allowable annual rent increase is set at 6% + CPI (inflation adjustment), hard cap not to exceed 10%
• Base rent is set at what the landlord charged as of July 1, 2019
• Only 1 rent increase allowed every 12 months
• Single family homes are exempt
• All units built after February 1, 1995 are exempt
• Just cause for eviction. After 1 year of occupancy, owners may only terminate tenancy for cause (like failure to pay rent or illegal activity), OR may only terminate tenancy with 120-day notice for the following reasons:
• To make substantial repairs (must offer tenant first right to return) 
• Landlord or immediate family moves into the unit 
• Landlord withdraws all of the units in the building from the rental market for at least one year.

The ordinance will sunset on December 31, 2024 unless extended.

For added fun, there is a statewide rent cap bill, AB1482, making its way through the legislature right now. It will be interesting to see if there is the political will to make rent control a statewide policy. We shall know on that one in the next month.

If you are thinking about selling a rental or investment property in the city limits of Sacramento that falls within the jurisdiction of these rent control ordinances, please reach out to me right away so we can strategize how to sell the property in compliance with the ordinance.

A great start to 2019 - honored by the Sacramento Association of Realtors for my work in real estate advocacy...

It's nice to be recognized for my efforts, and last night at the officer and directors installation event at the Sacramento Association of Realtors I received an award for my efforts in political affairs. I imagine this is due in large part to helping orchestrate association's the "Yes on 5, No on 10" campaign locally during the election cycle, among other activities I help with as a member of the board of directors for the California Association of Realtors. I do not think many people are aware, but the Realtors associations are among the only advocates for private property rights and homeownership. I love being involved in our advocacy endeavors. Onward!

Why I am voting YES on Proposition 5, and NO on Proposition 10

While I was out of town this last week attending the California Association of Realtors policy committees and board of directors meetings, my vote-by-mail ballot arrived at my house. Sacramento County residents now ALL receive ballots in the mail to be mailed back or dropped off at designated locations. And over the next few weeks, voters will have to contemplate their options with regard to a number of local, state, and federal races and numerous California ballot propositions. There are two propositions in particular that could dramatically affect housing opportunities, private property rights, and the availability of affordable housing in California: Proposition 5 and Proposition 10. As someone with a Master's Degree in Public Policy and Administration, who understands housing issues, who works with buyers and sellers - I want to explain why I support Proposition 5 and oppose Proposition 10 and encourage you to keep this rationale in mind when completing your ballots.

YES on Proposition 5
Proposition 5 is the "Property Tax Fairness" initiative and would remove the "moving penalty" from California's property tax system. It would allow seniors, the severely disabled, and victims of natural disasters (think California wildfires) to transfer their existing low property tax base value when purchasing another home located anywhere in California. These people would be permitted to purchase a more expensive property if needed and pay a blended rate that incorporates a slight property tax increase from the difference in value from the home sold and the home purchased.

There are several seniors I have talked to over my 13 years in real estate who would love to sell their current home, but they'd suffer a "moving penalty" and cannot afford to sell. Huh? Let me explain. One such Sacramento couple has lived in their home for 30+ years, their children long ago moved out, and both are retired and living on fixed incomes. They own their home free and clear but no longer can maintain it. They no longer need the quarter acre yard where their children once played, and what used to be manicured lawn and gardens is now mostly overgrown weeds. The wife has mobility issues and has not been upstairs in a few years - because she physically can't get up the stairs. There a couple of empty bedrooms. The house needs a new roof. The home is drafty and grossly energy inefficient, and needs those improvements and other cosmetic updates. The expense of making those repairs would more than wipe out their savings. They would love to move to a newer single level condo in Alameda County, near their adult children and grandchildren, with no yard to maintain and that requires little upkeep. Their current property tax bill for their paid-for Sacramento home is roughly $1200 per year, kept low by Proposition 13 from 1978, which bases property tax on the home's acquisition value. Their home is worth about $400,000. The type of condo they'd like to buy is about $500,000. Current law allows for one-time property tax base transfers and within the same California county (or to few other counties that allow incoming transfers), and only to purchase a lower priced home. Purchasing a new condo for a higher price in another county would quadruple their annual property tax to $5,000 per year (over $400/month). This is an expense they cannot afford. And because of this, they stay in their home even though it no longer meets their needs. Moving from their current home would also free it up to allow another family to come in buy it, and renovate the property, better maintain the yard, and use the home's full bedroom capacity.

Because I see this scenario first hand everyday, I want to support helping homeowners like this couple avoid the moving penalty and be able to purchase a more suitable home in a different area. The elderly couple I described would pay $1200 plus another $1000 (the value of property tax for the difference between their $400,000 sale and $500,000 purchase). The new owner of the home they sold would pay $4000 of annual property tax instead of the $1200 the sellers paid.

The social benefits of this proposition are many - parents can be closer to adult children. Adult children nearby can help care for aging parents. Conversely, grandparents can help care for their grandchildren instead of hired babysitters or daycare. The positive economic spillover effects of these moves are also many. The buyer of the sold home will likely spend money to renovate the home, hiring local contractors. They will spend money at Home Depot and other local suppliers. Their kids again will attend the local schools. They will eat at local restaurants and spend money in other local stores. They will infuse new capital and economic activity into the local area.

I could enumerate many other examples of other people who are locked into their homes by the low property tax base. These people need to sell and cannot afford the moving penalty. This is why I am voting YES on Proposition 5 - to help these people afford to move and to free up their existing home for another more suitable buyer.

NO on Proposition 10
Proposition 10 is a repeal of the Costa-Hawkins Rental Housing Act. The California Legislature enacted Costa-Hawkins in 1995 to place parameters on how local governments can apply rent control ordinances. The parameters imposed by Costa-Hawkins prevent rent control from being imposed on new construction (rental units built after 1995 when the legislation went into effect). It prevents rent control from being applied to single family homes and condos. It also allows for "vacancy decontrol", such that when a rent-controlled unit is vacated by a tenant, a landlord can charge a new incoming tenant market rent. That market rent would be the new baseline for the rent control pricing. Proposition 10 remove these parameters, thus enabling the wild west of rent control ordinances.

Oh gosh, where do I begin to describe how devastating Proposition 10 would be to housing in California? It's such a bad idea that both Gavin Newsom and John Cox, candidates for California Governor, are opposed to Proposition 10. The California Legislature defeated a bill to repeal Costa-Hawkins earlier this year. And a vast majority of economists agree rent control is bad for renters having the opposite effects intended.

First, Proposition 10 would allow rent control to be applied to new construction. At a time where the California Department of Housing and Community Development reports we need at least 180,000 new housing units constructed each year -- an annual number California has been far behind already for a decade -- Proposition 10 would gut every effort to construct new units. We need builders to build in California. Builders in turn need to be profitable. If Proposition 10 passed, what builders in their right minds would build rental housing in California knowing at any time their profitability could be threatened by rent control? They would take their resources to other states and build there. We already have a severe housing shortage in California and this would exacerbate the housing shortage.

Second, Proposition 10 would allow rent control to be applied to single family homes and condos. This could result in rent control applying to homeowners who rent rooms in their own residences. It could allow bureaucrats the ability to mandate homeowners pay a fee to take their own home off the rental market. Why would voters want to handcuff the use of their own homes? Further, I know a lot about Homeowners Associations (HOAs - my masters thesis topic actually), and nearly one quarter of Californians live in properties governed by HOAs. Private associations have the ability to limit or restrict an owner's ability to rent out their units. If Proposition 10 is passed, HOA's are likely to respond by passing rules cease the rental of properties in their neighborhoods. This will further limit how owners can use their properties, and prevent homes and condos that might be turned into rental units from doing so. This again would limit the availability of units for rent and result in curbing owners' private property rights.

Third, Proposition 10 would eliminate vacancy decontrol, where landlords can increase the rent of a unit to the current market rent when a tenant moves out. If landlords must continue to charge the same low rent to subsequent tenants in rent-controlled property, this would further constrain ability of landlords to make any profit on their rentals. MOST landlords in California are mom-and-pop owners whose rental properties are part of their long-term retirement portfolio. Making rent-controlled units perpetually price-fixed for eternity is extremely unfair to landlords who already are burdened by increasing maintenance and utility costs, and rent price ceilings. It would likely result in decreased property values as well as create a perverse incentive for landlords not to maintain or improve their units for new tenants because they will just not be able to afford it.

There are many other negative implications to the repeal of Costa Hawkins as well, but I think you get the idea. At a time when California desperately needs more housing units, this is NOT a way to increase the supply of housing. This does not help renters. There are about 15 cities in California that have some form of rent control. Recent studies from Stanford have linked the current rent control ordinances in San Francisco with as much as a 15% reduction in available rental housing units. The results of not constructing new housing units and pillaging the property rights of owners will make a bad problem worse. This is why I am voting NO on Proposition 10.