Report: Measure ULA “Significantly” Reduces Multifamily Sales

Measure ULA, the so-called “mansion tax” on property sales of greater than $5 million that took effect last April, has “significantly” reduced sales of apartment buildings in Los Angeles and the San Fernando Valley, according to a report from NAI Capital Commercial. In LA, wrote NAI Capital’s J.C. Casillas, sales volume for these properties plummeted by 71% year-over-year in 2023, “with the number of deals sharply declining by 85% compared to the previous year.” 

In the San Fernando Valley, most of which is subject to Measure ULA, sales volume decreased by 75% Y-O-Y. L.A.’s Westside has seen an 85% decline in sales volume and a 75% Y-O-Y reduction in the number of transactions, “primarily due to the impact of the ULA Tax,” wrote Casillas, managing director, research and public relations. 

Effective June 30, the threshold for Measure ULA will be adjusted upward in line with the Consumer Price Index. Transactions of greater than $5,150,000 will be subject to a 4% tax, while those above $10.3 million will incur a 5.5% tax. 

“Against a backdrop of slower rental rate growth, elevated interest rates, and new taxes, investors must remain vigilant to navigate potential challenges and adapt their strategies accordingly,” Casillas wrote. 

Leaders from Rialto Capital Management, AEW, CIM, Rexford Industrial, EQR and Cushman & Wakefield come together on the Capital Markets panel at Connect Los Angeles 2024 on May 1 at the InterContinental in DTLA. Register now to hear from these industry experts and more.