Prop 42 won. Atherton's mansions aren't going on the market

Atherton's typical home was worth about $10.42 million in October 2026, according to Houseberry's Atherton city page. A year earlier it was $8.15 million. That climb happened during the exact months California argued over whether to tax the people who own a lot of those homes.

Now the argument is over. California voters rejected Proposition 40, the one-time 5 percent tax on billionaires' net worth, and passed Proposition 42, which writes a ban on new state taxes on stock, business stakes and other personal property into the state constitution. In the statewide count released Wednesday morning, Prop 40 drew 44.4 percent yes and Prop 42 drew 54.3 percent, per the San Francisco Standard.

For homeowners in Atherton, Woodside, Portola Valley and Los Altos Hills, the second result matters more than the first.

Prop 40's loss ends one tax. Prop 42 removes the reason a billionaire had to think twice about keeping a house here at all.

Prop 42 closes the door, not just this tax

Prop 40 would have charged roughly 200 billionaires 5 percent of their net worth once, based on who lived in California on Jan. 1, 2026. We covered who those people are, and where they live, in our September look at the billionaire towns.

Prop 42 goes further. The ballot summary says it "prohibits any new state tax" on the ownership of personal property, which LAist's voter guide explains as everything people own other than real estate. It also bars most taxes that reach back in time, and it voids conflicting taxes enacted after Jan. 1, 2026. Because it got more votes than Prop 40, it would have knocked out the billionaire tax even if Prop 40 had squeaked through.

The money behind it was lopsided. Supporters reported about $127.9 million by Oct. 28 against $34.4 million for opponents, KQED's tracker shows. Sergey Brin alone gave $102 million to Building a Better California, the committee he founded to fight the tax, CalMatters reported.

SEIU-United Healthcare Workers West, which sponsored Prop 40, says it will try again in 2028. Its president, Dave Regan, told CalMatters: "That's not a hypothetical. That's our plan." The bar is higher now. A 2028 wealth tax would have to be its own constitutional amendment that overrides Prop 42, then win a majority.

The house was the risk. Now it isn't

Prop 40 never taxed a single Atherton estate. Real estate held directly was excluded. Housing came into it through residency, because where you keep your home is one of the heaviest facts California weighs when it decides who lives here.

That made a big Peninsula house a liability for anyone trying to prove they had left. When Larry Ellison's Pacific Heights house sold for $45 million in December 2025, tax adviser David Lesperance told the New York Post that Ellison was likely advised a California residence "was not worth the risk."

Prop 42 ends that calculation. The state cannot reach back to a Jan. 1, 2026 snapshot, and it cannot tax a stock portfolio for sitting in a Woodside owner's name. A founder who still owns a home on Atherton's flat, oak-shaded lanes has no wealth-tax reason to list it this spring.

Our view: the estate sell-off opponents warned about was always bigger in campaign mailers than in the sale records, and Prop 42 makes it smaller still. Expect the Peninsula's thin inventory to stay thin.

Atherton never priced in an exodus

The cleanest test of the fear is what buyers paid while it was loudest. Here is how seven Peninsula towns at the center of the billionaire-tax debate moved over their latest 12 months of Houseberry data.

Atherton added about $206,000 a month to its typical price, on average, and rose in 10 of the 11 months after November 2025. No town in the group fell more than about 3 percent. The median change across the seven was 9.0 percent.

Two cautions about that table. The Atherton and Hillsborough figures are a smoothed typical price, while the other five are monthly medians built from a handful of sales. Woodside's median swung between $2.92 million and $5.89 million inside a single year, and it jumped 10.4 percent in August alone. And the money that drove Atherton higher was mostly AI stock, not tax policy.

The flat towns also say something. Los Altos Hills scores a perfect 5.0 overall and 5.0 on safety in Houseberry's ratings, the best of the group, and its median still slipped about 3 percent. Buyers at this level pay for land and privacy. Inside Atherton, West Atherton's median ran $14.17 million in August 2026, about $4.2 million above the town's $9.95 million typical home that month.

What the state gave up

The trade-off is real, and it is large. The Legislative Analyst's Office estimated Prop 40 would raise tens of billions of dollars over several years, money its backers had aimed at health care as federal cuts threaten coverage for about 2 million Californians, CalMatters noted. That money is gone, and Prop 42 makes it much harder to raise this way later.

Gov. Gavin Newsom, who backed Prop 42, made the case on Substack, per the Standard, that "wealth is movable, and it shops for the state with the lowest taxes." For Peninsula housing, the bigger point is that the homes do not move. Under Prop 13 the property tax on an Atherton estate resets only when it sells, and Prop 42 leaves that system alone.

Questions readers are asking

Does Prop 42 change property taxes on Atherton homes? No. Prop 42 applies to personal property, defined as everything other than real estate, and homes are still assessed under Prop 13.

Could California still pass a wealth tax? Only by amending the constitution again, with a new measure that overrides Prop 42 and wins a majority of voters.

Are the results final? Counties keep counting until the Dec. 11 certification deadline. The margins on Props 40 and 42 were about 11 and 9 points in the Nov. 4 count.

Will Atherton home prices drop now? Nothing in the vote points that way. The tax that might have pushed estates onto the market is gone. Atherton's typical price rose in 10 of the last 11 months.

If you are pricing a move along Sand Hill Road, start with how every Peninsula neighborhood scores, or narrow it to Atherton's six ranked neighborhoods, where Atherton Oaks and Lindenwood lead at 4.1.

Sources

• San Francisco Standard, Nov. 4 statewide count for Props 40, 41 and 42
• CalMatters, Prop 40 election results and campaign spending
• LAist, Proposition 42 voter guide
• KQED, Proposition 42 results and fundraising
• CalMatters, Proposition 42 voter guide