Depending on who you ask, Measure ULA has been a godsend or a disaster for L.A.’s real estate market. A new report suggests the latter.
A new analysis from UCLA’s Lewis Center for Regional Policy Studies authored by Michael Manville and Mott Smith claims that the so-called “mansion tax” has slowed down sales, especially for commercial properties.
Measure ULA was passed in 2022 and took effect in April 2023, bringing a 4% charge to all L.A. property sales above $5 million and a 5.5% charge to sales above $10 million. The proceeds fund affordable housing and homelessness prevention initiatives; roughly two years in, the transfer tax has raised more than $632 million.
But the report — published Tuesday and titled “The Unintended Consequences of Measure ULA” — suggests the tax has chilled a once-robust market in L.A., while sales above $5 million have remained steady in other markets across L.A. County not affected by the tax.
The study analyzed 338,000 property sales over the last five years and found that the drop is most acute on the commercial side. Under ULA, non-single-family transactions fell 7-15% per month in L.A. ZIP Codes, a trend that compounded to 30-50% over the course of two years.
“The hardest-hit properties are not luxury homes, but multifamily, commercial and industrial buildings — the very types we need to support housing production and job growth,” Smith said.
A commercial decline hurts the city in two ways, the report argues. First, commercial properties often sell for significantly more than single-family homes, so even a slight decrease in sales leads to a large drop in tax revenue. In addition, commercial sales typically lead to new multifamily development, which the city desperately needs in the midst of a housing crisis.
Smith said the decline led to a $25-million annual loss in property tax revenue, and that loss will compound over the next few years. In a decade, the loss in revenue could exceed the funds brought in by the tax.
Property taxes are different from money brought in by ULA’s transfer tax. Property taxes flow into the city’s general budget, while ULA taxes are specifically earmarked for affordable housing and homelessness initiatives.
Smith and Manville suggested reforming the tax to only affect properties that haven’t been reassessed in 20 years, which could exempt multifamily developers while still targeting luxury homeowners whose property values have soared over the years.
Joe Donlin, who serves as director of United to House L.A., the organization behind Measure ULA, said the tax is doing what it set out to do.
“On its second anniversary, Measure ULA is already producing hundreds of units of affordable housing, protecting tens of thousands of renters and creating thousands of construction jobs,” Donlin said. “Its initial dip in revenue owes more to developers and the real estate lobby hoping to overturn it in court or at the ballot box — and losing.”
The tax has survived multiple legal challenges in the last few years from the luxury real estate community, who sought to declare the measure unconstitutional. In addition, revenue sputtered in the first year of the program as property owners either sold off homes in the days before the tax took effect or found loopholes to avoid paying it.
Revenue and sales have both increased year over year as legal challenges fade. The tax raised roughly $296 million in fiscal year 2024 and has raised $320 million so far in fiscal year 2025. But the numbers still fall well short of initial projections of $900 million per year.
