Depending on who you ask, Measure ULA was a godsend or disaster for the LA real estate market. The new report suggests the latter.
A new analysis of UCLA’s Lewis Regional Policy Studies Center, created by Michael Manville and Mott Smith, claims that the so-called “mansion tax” has slowed sales, particularly for commercial property.
Measure ULA passed in 2022 and came into effect in April 2023, bringing over $5 million to all LA property sales, with a 5.5% billing of 4% on sales exceeding $10 million. The proceeds fund affordable housing and homelessness prevention initiatives. About two years later, the relocation tax raised more than $632 million.
However, a report published Tuesday, entitled “Unintended Consequences of Measure ULA” suggests that taxes have cooled the once-robust market in LA, but sales over $5 million have been stable in other markets in LA County that are not affected by the tax.
The study analyzed 338,000 real estate sales over the past five years, and found this decline to be the most severe on the commercial side. Under ULA, non-single family trading fell by 7-15% per month on the La Zip code. This is a trend that is tailored to 30-50% over two years.
“The most intense hit facilities are multi-family, commercial and industrial buildings, not luxury homes. This is the very type of property you need to support the growth of housing production and employment,” Smith said.
The report argues that commercial decline is hurting cities in two ways. First, commercial real estate is often sold much more than single-family homes, so even a slight decline in sales can lead to a significant drop in tax revenue. Furthermore, commercial sales usually lead to new apartment building developments that cities desperately need during the housing crisis.
Smith said the decline will result in a loss of $25 million in property tax revenue, which will worsen over the next few years. Over a decade, losses in revenue could exceed the funds brought by taxes.
Property tax is different from the money brought by ULA’s transfer tax. Property taxes flow into the city’s general budget, while ULA taxes are specifically allocated for affordable housing and homelessness initiatives.
Smith and Manville proposed reforming the tax to only affect real estate that has not been revalued within 20 years.
Joe Donlin, who oversees House LA, the organization behind Measurement ULA, said he is doing what the tax is trying to do.
“As we celebrate our second anniversary, Measure ULA is already producing hundreds of affordable homes, protecting tens of thousands of renters and creating thousands of construction jobs,” Don Lin said. “The first dip of revenue owes more to the developers and the real estate lobby who wants to overturn it in court or ballot boxes.
The tax has survived multiple legal challenges from the gorgeous real estate community over the past few years. They sought to declare the measure unconstitutional. Additionally, revenues spiked in the first year of the program as tax owners found loopholes to avoid selling their homes or paying them in the days before the tax came into effect.
As legal challenges fade away, both revenue and sales are increasing year by year. The tax raised approximately $296 million in 2024 and $320 million so far in 2025.
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