In the lead up to the midterm elections, there has been a lot of heated debate about California rent control.

Since 1995, a state law called the Costa-Hawkins Rental Housing Act has restricted the ability of cities to set their own rent control policies. This is part of why rent and home prices are extremely high in California compared to most of the country. According to Bloomberg, the median home price in California has doubled since 2011 to nearly $600,000. Two out of every five households in the state currently spend more than 30% of their income on housing, and there has been a rise in homelessness as rent prices have simply gotten too high for some California residents.

There’s no question that California has a housing problem. The big question is what the best way to handle the situation is, and that’s where many people disagree.

On November 6, California voters decided to (pass / reject) Proposition 10, a measure to reverse Costa-Hawkins and allow cities to decide for themselves whether or not to impose rent control ordinances in order to help people stay in their homes and curb the effects of rising rent.

Opponents – backed by nearly $66 million in contributions – argued that the measure would actually make the situation worse by curbing development and thereby making the housing shortage an even bigger problem. Proponents argued that the measure doesn’t actually change anything – it just gives authority back to local governments to decide for themselves whether or not to enact rent control.

For their part, some real estate developers have already started planning for rent control. One developer putting up new apartments in Hollywood got his project pushed through by offering rent control to all the previous tenants and defraying the costs of their displacement during construction.

What will the future hold for the California house flipping market? Only time will tell.

(With the passage of Proposition 10, hopefully we will see some pressure taken off the housing market for renters while developers still find plenty of reason to invest in California. On the buying side, it seems that the impact will be minimal, though it is possible that some people with more manageable rents will put off buying.


With the rejection of Proposition 10, the power remains with the state to restrict rent control, which means that California will need to find some other, more tenable solution for the current housing shortage.)

To learn more about Proposition 10, feel free to give our office a call. You can also call anytime to learn more about our current house flipping loans or to discuss the potential benefits of flipping with residential rehab loans.