LA's Mansion Tax Cost the City 9,000 New Homes and 16,500 Construction Jobs, RAND Study Finds
Los Angeles' controversial "mansion tax" just got its most thorough academic audit - and the verdict is rough. Researchers at the RAND Corporation conclude in an 89-page report that Measure ULA, the real estate transfer tax enacted in April 2023, has cost the city more than 9,000 new housing units, 16,500 construction jobs and $452 million in lost municipal revenue, Realtor.com reports.
The mechanics explain the fallout. Despite the nickname, the tax hits all property sales - not just mansions - at 4% on sales from $5.4 million to $10.9 million and 5.5% above that, on top of the standard 0.45% transfer tax. RAND estimates the tax slashed high-value property sales by 31% through early 2026, with apartment and commercial sales falling more than 46% as owners held rather than sell and developers walked away from deals the tax made uneconomic.
The revenue math also disappointed. ULA raised approximately $1.2 billion by early 2026 for affordable housing and homelessness programs - less than half the $2.7 billion the measure's champions projected. And the city has spent only about $114 million of it, less than 10%.
"Measure ULA has the noble aspiration of delivering more affordable housing inventory to Los Angeles, but its negative repercussions may outweigh its benefits," said Joel Berner, a senior economist at Realtor.com. "A transfer tax of this type adds friction to the housing market and slows the number of home transactions."
For South Bay sellers and developers, the lesson lands close to home: LA just approved a record $466.6 million affordable-housing funding round funded mostly by ULA dollars - but the RAND math says the tax destroyed more than twice as much housing as it can fund. High-end South Bay sellers sit in a different jurisdiction, but they compete for the same luxury buyers whose activity the tax has frozen north of the hill.
Source: Realtor.com - https://www.realtor.com/news/trends/los-angeles-california-mansion-tax-study/
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