When it comes to California’s housing crisis, residents are saying enough is enough.

Last November, Californians voted on transformative housing measures in their cities amid a long-simmering statewide shortage. The 2022 midterm election highlighted voters’ growing displeasure with priced right housing, but the results also renew optimism as the state pivots its policies for 2023 and beyond.

Voters focused their ire on local zoning, tax and homelessness issues. Read on for the most critical housing-related measures passed in November 2022 across California’s major metros. Find your service area below for a breakdown of the changes impacting your practice.

In Los Angeles, residents voted “yes” on:

  • Measure LH — earmarking public money to aid the development of an additional 5,000 low-income rental units per city council district;
  • Measure EM — authorizing the rent control board to modify or reject annual rent adjustments during a state of emergency declared by the president, governor, LA public health officer, or city council;
  • Measure H — enacting a rent control program limiting annual rent increases to 75% of consumer price index (CPI); and
  • Measure RC — requiring residential landlords to intend occupancy for a minimum of two years, move in within 60 days of vacancy to evict a tenant, and reduce the rent increase cap to $70 per month.

In Orange County, voters approved:

  • Measure K — allowing the city council in Costa Mesa to adopt publicly-reviewed land use plans to refresh areas, expand low- and mid-tier housing, and restrict building height.

In Riverside County:

  • Measure K — passes the fee of 15 cents per building square foot on single-family residential (SFR)
    units, the authorization of bonds, and an appropriation limit of $39 million.

In San Diego County, voters secured:

  • Measure B — ends free trash pick-up for single-family units; and
  • Measure C — places a 30-ft. height limit on buildings in most areas west of Interstate 5, according to the San Diego Union-Tribune.

In Sacramento County, residents can look forward to:

  • Measure D — allows the county to develop low-income housing equal to 1% of its existing housing, according to Sacramento County.

In San Francisco County:

  • Proposition M — enforces a tax, at a rate between $2,500 and $5,000 per vacant unit, on owners of vacant residential units in buildings with three or more units when the units have been vacant for more than 182 days in a year.

Lastly, Santa Clara County voters said “yes” to:

  • Measure M — imposes a parcel tax of $348 per parcel for 8 years to fund schools; and
  • Measure A — adjusts zoning regulations to disallow construction with characteristics of new storage and distribution use.

Editor’s note — For an exhaustive roundup of California’s midterm election results, visit Ballotpedia.

Taken individually, these changes represent only incremental steps toward more priced right housing for low- and middle-income earners. But together, these policy changes reflect residents’ roiling frustration with cities to do something about housing costs. Perhaps the biggest mandate to emerge from the midterm’s results is on homelessness.

Related article:

California real estate: 2022 in review and a forecast for 2023

Measures for housing the unhoused

While homes prices and sales volume swelled during the pandemic, so too did the number of California’s unhoused. In fact, the state’s unhoused population rose by 22,500 between 2019 and 2022 — a conservative figure to be sure. But the passage of a few notable housing measures across the hardest-hit counties is turning compassion into legislative action.

To alleviate the homelessness crisis in their counties, voters passed:

  • Measure ULA in Los Angeles, which raises nearly $1 billion annually for housing and homelessness efforts by taxing property sales of $5 million or more;
  • Measure S in San Diego, which raises sales tax by one penny to aid the homelessness crisis;
  • Measure O in Sacramento, a new homelessness policy that requires a minimum number of emergency shelter spaces based on number of unhoused individuals, prohibits encampments, and limits the city’s annual budget of $5 million;
  • Measure B also in Sacramento, creating gross receipt tax from cannabis and hemp businesses to fund county homelessness services; and
  • Proposition C in San Francisco, which creates a Homelessness Oversight Commission to oversee the Department of Homelessness and Supportive Housing and requires the city controller to conduct audits of services for people experiencing homelessness.

Though these measures ensure funding for vital homelessness programs and services, they do not directly address the root of the issue: California’s housing inventory shortage. The state is about 2 million units short of meeting demand, according to a landmark McKinsey & Company report.

Ultimately, only increasing housing inventory and production will make a long-term material impact in the prevalence of homelessness across California neighborhoods. This means clearing obstacles to construction starts, which are sluggish going into 2023.

At the local level, the housing bottleneck starts early — in the planning stage. Vocal not-in-my-backyard (NIMBY) advocates have long wielded outsized power in city council meeting, killing residential construction projects in their neighborhoods despite an urgent need for greater density.

Related article:

California’s new housing strike force prepares for battle — with NIMBYs

The market braces for impact

Though the state’s emergency response ended in 2022, the pandemic disruption will still ripple through 2023. Agents and brokers can expect inflation, mortgage interest rates, and evaporating sales volume to continue dominating 2023’s news cycle. It’s no surprise that many of the midterm’s housing measures were created in response to these forces.

Consider Measure EM and Measure H in Los Angeles. Both measures address rent control in response to housing price spikes fueling gentrification across the state. As home and rental prices spiked, many Californians lost their jobs and their ability to cover housing costs. This prompted a renewed push by YIMBY advocates to combat restrictive housing policies in desirable residential areas.

Housing policies informed by the pandemic’s economic lessons are finding their way into legislation as the state level as well. Senate Bill (SB) 6 and Assembly Bill (AB) 2011 encourage builders to transform office and retail commercial spaces into housing units for low- and middle-income earners.

Surviving (and thriving) during the 2023 recession means staying on top of shifting economic and legislative environments. Be the first on your team to pivot with California’s market and laws by subscribing to Quilix, the weekly firsttuesday real estate newsletter.

Related article:

Legislative steps toward more affordable housing