Dear Friends-

The numbers no longer pencil out like they once did. There was a time when a small home by the sea, a spare room above the garage, or a quiet cabin in the hills could mean a measure of freedom—a little breath between the weight of bills and the long grind of work. It was the dream of ordinary Californians, not the rich or the reckless, but the careful ones who built something modest and hoped it might carry them through their later years.

But California, once called the Golden State, has grown heavier in its hand. The newest burden comes under the fine print of Senate Bill 584—the Labor Force Housing Financing Act. It took effect on the first day of 2025, quiet as the dawn but sharp as a knife. A new 15% state tax now cuts into every short-term rental, on top of the taxes already waiting at the local level.

The law says it’s for a noble cause—to build homes for those who cannot afford them. But the nobility feels hollow to the small owner staring at the ledger, watching red ink spill where there used to be black.

Take a place like Huntington Beach. There, the local tax is already 10%, with another 4% added for the tourism district. Now comes this new 15% state tax, stacked on top until the total swells to 29%. Nearly one-third of every dollar earned is gone before it ever reaches the pocket that earned it.

And that is before the others come calling—insurance, utilities, cleaning crews, repairs, property managers, the platform fees from Airbnb and Vrbo that take another 14 to 20 percent. What once felt like opportunity now feels like punishment.

Across the state, people are folding. The data confirms what the streets already whisper—listings have fallen by a third, some places by half. Homes that once welcomed travelers now sit dark, or else are turned into long-term rentals, or sold outright. The wind is shifting, and with it, the shape of the market.

Some say this will bring prices down, open doors for the young and the shut out. Maybe it will. But others know better. They see the banks’ high rates standing guard at those same doors, turning buyers away. They see the builders stalled, lumber prices high, cranes rusting in the sun. The state has not built enough, and still it reaches for more.

The tragedy here is not just economic—it is human. For years, the small owner has stood as the quiet backbone of this place: the retired couple keeping their nest egg afloat with a rental by the beach; the teacher renting her spare room to cover rising costs; the family that turned an old house into a living. These were not moguls or speculators. They were Californians trying to hold onto a little dignity in a state that makes it harder each year to do so.

Now the weight comes down again, and it is always on the same shoulders. The big hotels—the ones with lobbyists and lawyers—will adapt. The corporations will find loopholes. It is the little people, the ones without accountants or connections, who will feel the squeeze until they can no longer breathe.

There was a time when California’s promise was simple: work hard, build something, and keep what you earn. But somewhere along the way, that promise became conditional—granted only with permission, only if it fits within the ever-widening grasp of the state.

The sun still sets golden over the Pacific, the same as it did when the dream began. But more and more, it feels like a memory, something slipping quietly beyond reach.

And if you listen closely, you can almost hear it—the sound of doors closing, one by one, across a land that once prided itself on being open.

Stay positive.  Remember, if you need a smile, I will lend you mine.

Frank (310) 503-4158