THE BOTTOM LINE - Measure ULA was sold as a way to fund affordable housing. New research suggests the tax may also be suppressing the very housing production Los Angeles desperately needs.
Los Angeles has spent years declaring housing a crisis. Rents are crushing working families. Young people are questioning whether they can afford to remain in the city where they grew up. Thousands of Angelenos are living on the streets.
So, what did Los Angeles do?
It made housing more expensive to build, buy, and sell.
That is the uncomfortable story of Measure ULA.
Passed by voters in 2022, ULA was marketed as a “mansion tax” an appealing slogan suggesting that wealthy homeowners selling luxury estates would finance affordable housing for everyone else.
But that slogan never told the whole story.
ULA is not simply a tax on mansions. It is a tax on qualifying real-estate transactions, including apartment buildings, commercial properties, industrial properties and development sites.
Today, Los Angeles imposes an additional 4% tax on qualifying transfers above $5.4 million and 5.5% on transfers of $10.9 million or more, on top of the city’s existing transfer tax.
And once a transaction crosses the threshold, the tax applies to the entire sale price.
That is not a minor fee. On a $6 million transaction, the ULA tax alone can total roughly $240,000. On a $20 million transaction, it can reach $1.1 million.
Taxes Change Behavior
Government should not be surprised when people respond to incentives.
Tax cigarettes and politicians expect less smoking. Tax carbon and they expect fewer emissions. Tax high-value real-estate transactions and eventually you get fewer high-value real-estate transactions.
That appears to be exactly what happened.
Researchers Michael Manville of UCLA and Mott Smith of USC found that after ULA took effect, the odds of a Los Angeles property selling above the tax threshold fell by as much as 50%.
Their strongest evidence showed that transactions involving commercial, industrial, and multifamily properties declined by roughly 30% to 50%.
Those are not mansions. That is the real-estate economy.
And the impact on housing construction may be even more troubling.
A 2026 econometric analysis cited by UCLA estimated that ULA reduced permitting for multifamily developments of 20 units or more by 31% — roughly 1,900 housing units per year.
That number should stop every policymaker in City Hall in their tracks.
Los Angeles imposed a tax designed to raise money for housing. Researchers now estimate that the tax itself is contributing to less housing being produced.
That is not merely an unintended consequence. It is a policy contradiction.
Housing Does Not Build Itself
Housing does not appear because politicians declare it a priority.
Someone has to buy the land, finance the project, pay permitting costs, construction costs, labor, insurance, and interest, and take the financial risk.
At the end of that process, the project still has to make economic sense.
Make those transactions substantially more expensive and some projects simply stop penciling out. Development sites do not sell. Projects do not move forward. Capital goes somewhere else.
Los Angeles can dislike that reality. It cannot repeal it.
ULA also creates another troubling consequence.
Because California properties are generally reassessed when ownership changes, fewer transactions can also mean less property-tax revenue.
Manville and Smith estimate that ULA initially reduces property-tax revenue to local governments by roughly $25 million annually, with those losses potentially compounding over time.
Think about that.
Los Angeles created a new tax that suppresses transactions that generate revenue from an existing tax. Then City Hall celebrates the money the new tax raises.
ULA Raises Money But That Is Not the Whole Story
Supporters of Measure ULA have a legitimate argument.
The measure has generated substantial revenue, and Los Angeles is using that money for affordable housing, homelessness prevention and housing preservation.
Those are important goals.
But they do not answer the central question:
At what economic cost are we raising the money?
A housing policy cannot be judged only by how many dollars it distributes. It must also be judged by how much housing it discourages from being built.
If Los Angeles spends hundreds of millions of dollars subsidizing affordable housing while simultaneously suppressing thousands of privately financed housing units, City Hall cannot simply count one side of the equation. It must account for both.
That is why the “mansion tax” label was so misleading.
Voters were not simply deciding whether wealthy homeowners should pay more. They were changing the economics of major real-estate transactions across Los Angeles.
Apartment buildings were affected. Development parcels were affected. Commercial properties were affected. Future housing investments were affected.
The question should never have been simply: Who pays the tax?
The more important question was: What activity will this tax discourage?
We now have evidence pointing toward the answer.
Transactions fell. Housing production fell. Potential property-tax revenue fell.
And Los Angeles already desperate for more housing may have made its housing shortage worse.
Fix the Tax Before It Does More Damage
None of this means Los Angeles must abandon the goals behind Measure ULA.
It means the tax should be reformed.
The city should examine exemptions or different treatment for new multifamily housing, development sites and other transactions directly connected to housing production.
It should reconsider a structure that applies the tax to the entire transaction once the threshold is crossed.
And it should stop pretending that criticism of ULA is opposition to affordable housing.
Wanting more affordable housing does not require defending a tax that may be making housing harder to produce.
Good intentions do not erase economic consequences. Los Angeles wanted more housing.
It taxed the transactions needed to build and finance housing.
Researchers now estimate the city is losing roughly 1,900 multifamily units a year as a result.
There is a phrase that captures the contradiction almost perfectly:
Los Angeles is taxing housing to pay for housing. But the deeper problem is even worse.
We taxed housing to get more housing. And we got less.
A city facing an affordability emergency cannot afford policies that confuse collecting money with solving the problem.
Los Angeles does not need another slogan. It needs more homes.
(Mihran Kalaydjian is a seasoned public affairs and government relations professional with more than twenty years of experience in legislative affairs, public policy, community relations, and strategic communications. A respected civic leader and education advocate, he has spearheaded numerous academic and community initiatives, shaping dialogue and driving reform in local and regional political forums. His career reflects a steadfast commitment to transparency, accountability, and public service across Los Angeles and beyond.)
