Will Prop 5 Ease The Housing Crisis?


What is Prop 13:

Prop 13, the Tax Limitations Initiative, appeared on the ballot for the June election in 1978. Its passing required that properties be taxed at no more than 1 percent of their full cash value shown on the 1975-1976 assessment rolls and limited annual increases of assessed value to the inflation rate or 2 percent, whichever was less. When a property is sold or transferred to new owners; however, the property is reassessed at 1 percent of its full cash value and the limit on increases to assessed value resets.

This was then followed by Proposition 60, which amended Prop 13 to allow homeowners over the age of 55 or older to transfer their assessed taxable value of their home to a new residence within the same county, if the new home was of equal or lesser value and purchased within 2 years of the sale of the original residence.

Prop 13 was even further amended, when voters approved Prop 90. Essentially extending Prop 60 to participating counties, including Alameda; Los Angeles; Orange; Santa Clara; San Diego; Riverside; San Bernardino; San Mateo; El Dorado; and Ventura.

What does Prop 13 have to do with the current Prop 5?

Prop 5, the Property Tax Fairness Initiative, would amend Prop 13 to allow homebuyers who are age 55 or older, severely disabled, or disaster victims to transfer the tax-assessed value from their prior home to their new home, no matter the new home's market value; new home's location in the state; or the number of moves.

This Proposition is not to be confused with Prop 60, there are only ten counties that participate in this program, this Proposition would be statewide.


  • Older adults on fixed incomes need this protection.

    • Eliminates the ‘moving penalty’ that currently hurts seniors and disabled Californians.

    • Makes it easier for them to move near family or purchase more practical, safer homes.

    • Current law only allows somebody to purchase a home of equal or less expensive home within the county or one of the ten counties that participate in that program. While this would allow them to purchase a new home of any price with an adjustment consisting of the difference in value between the sale price of the original home and the sale price of the new home.

  • More houses will become available for younger families.

    • Roughly about 43,000 new transactions per year; about an 11% bump in annualized sales in the state of California.

  • Prop 5 will protect Prop 13 tax reductions.


  • Essential local services and schools will be affected.

    • An annual reduction in school revenue would begin at $100 million and grow to $1 billion in time.

    • Most school losses would need to be offset by equivalent increases in state funding, thereby increasing State spending by the same amounts.

  • Loss of local revenue will become worse every year.

    • Will have a net effect of reducing local revenue by about $100 million per year and grow to $1 billion in time.

    • Increased sales would generate property transfer taxes of tens of millions of dollars, while county administrative costs would rise by tens of millions of dollars at first.

  • Seniors already receive Prop 13 protection.

  • Provides a tax break for wealthy Californians and helps promote corporate real estate interests.

  • Doesn’t build any new housing or help first-time homebuyers purchase homes.

While the benefit of providing protections for seniors that would allow them to move throughout the state and maintain their tax base may be important, it is outweighed by overall cost to the State in the long run. This ordinance likely creates more movement from current housing stock, but does not create more housing.

We are in a significant housing crisis. But Prop 5 is not the answer. No on Prop 5.