Background: Measure ULA (“Mansion Tax”) in Los Angeles
Measure ULA (United to House LA), approved by Los Angeles voters in 2022, is a special real estate transfer tax aimed at funding affordable housing and homelessness programs
. It imposes a 4% tax on property sale prices above $5 million, and 5.5% on sale prices over $10 million. This tax (dubbed the “mansion tax”) took effect on April 1, 2023 and applies to all types of real estate transactions (residential and commercial) within LA city limits that exceed those value thresholds. The intent was to generate a substantial new revenue stream (initially projected at $600–$900 million per year) to build affordable housing and prevent homelessness. In practice, however, the tax has raised far less money than anticipated – roughly $300 million in its first year, about one-quarter of the city’s original estimate. Meanwhile, there are signs it has significantly cooled the high-end real estate market in Los Angeles, as detailed below. This backdrop sets the stage for Mayor Karen Bass’s recent comments about possibly pausing or suspending Measure ULA, especially to aid in specific situations like disaster recovery for wildfire victims. The big questions are whether she can legally pause a voter-approved tax, and what effects such a move might have on home buyers, sellers, and real estate professionals in L.A.
Legal Authority to Pause Measure ULA
Mayor Karen Bass’s ability to unilaterally suspend or “pause” Measure ULA is highly constrained by law. Because Measure ULA was enacted through a voter referendum (a city ballot initiative), it effectively became city law by the will of the voters. The Los Angeles City Charter limits how a ballot measure can be altered or overturned: essentially, only the voters can reverse their decision in a subsequent election, or the City Charter would have to be amended to supersede the measure. In other words, the mayor cannot simply issue an executive order to waive the tax, nor can the City Council roll it back with a normal ordinance, absent some overarching legal mechanism. Mayor Bass herself acknowledged this uncertainty. When asked about suspending the tax, she noted “There’s two schools of thought. One is, that can’t happen – it has to go back to voters. And the other is that it might be able to happen with action from the council and the mayor’s office”, adding that city attorneys are investigating what authority (if any) the City has to take such action. To date, no definitive legal pathway has been announced that would let Mayor Bass pause Measure ULA without voter input. Any attempt to do so unilaterally or through emergency powers would likely face immediate legal challenges. It’s worth noting that Measure ULA has already survived other legal attacks – a lawsuit by anti-tax groups to invalidate it was dismissed by a court in 2023, a decision Bass applauded as “the will of Los Angeles voters… upheld”. Opponents even tried to overturn ULA via a statewide initiative (the Taxpayer Protection Act), but the California Supreme Court blocked that effort as an improper use of the initiative power
Legal implications: If Mayor Bass were to press ahead and pause the ULA tax without a clear legal basis, the City could be sued for violating the Charter and the voter mandate. This could result in injunctions or a protracted court fight, creating uncertainty for all market participants. More likely, if Bass truly wants a suspension, she and the Council would need to pursue a charter amendment or a new ballot measure to authorize it – a process that takes time and political capital. In summary, Bass does not appear to have direct legal authority to pause Measure ULA on her own. Any pause would have to be carefully justified within the law (perhaps as a temporary measure under emergency provisions, though even that is debatable) or approved by voters. The mayor’s office has so far only said they are exploring “every possible option” with attorneys
, so the legality remains an open question. It’s clear, however, that simply flipping off a voter-approved tax is not something the City can do lightly or without legal consequence
. This legal hurdle is the first major consideration in evaluating the potential pause.
Impact on Home Sellers
High-end home sellers are the group most directly affected by Measure ULA, and thus they would feel the most immediate relief if it were suspended. Under the law today, any homeowner (or property owner) who sells an LA property above $5 million faces a hefty tax bill – 4% on the sale price above $5M (and 5.5% on amounts above $10M)
. This translates to an additional $200,000 on a $5 million sale, and even larger sums as the price increases (for example, a $10 million sale incurs about $550,000 in ULA tax). Such a cost, coming straight out of the seller’s proceeds at closing, has had a chilling effect on would-be sellers of luxury properties. Many owners of high-value real estate have simply opted not to sell at all under these conditions. In fact, in the 12 months since the tax took effect, the number of residential sales over $5 million in LA dropped by nearly 70% compared to the previous year
. According to data from Miller Samuel Inc., 416 homes sold for $5M+ in the year before ULA, but only 125 homes sold for $5M+ in the year after.
This stark decline suggests that hundreds of homeowners who might have sold decided to hold off – likely to avoid the ULA tax hit. Commercial property sellers reacted similarly, leading to an even more dramatic standstill (only 3 commercial sales over $10M closed in the month after ULA began, versus 73 such sales in the month prior as sellers rushed to beat the tax deadline
For these property owners, a temporary pause of Measure ULA would be very welcome. If the tax were suspended, sellers could save that 4–5.5% in extra costs, significantly increasing their net proceeds. This could unlock pent-up supply in the market: owners who delayed selling might finally list their properties, knowing they can transact without the steep tax penalty. Real estate brokers have reported that many wealthy homeowners and developers adopted a “do not sell” stance once ULA kicked in, so removing the tax (even briefly) might bring some of those properties to market. We would likely see a surge of high-end listings and closings during the suspension period, as sellers take advantage of the window of relief. This happened in reverse when ULA was about to start – there was a rush of luxury sales closing just before April 2023 to avoid the new tax
. A pause now could create the opposite rush: an opportunistic wave of sales if sellers know the tax will resume later.
From the home seller’s perspective, pausing ULA reduces transaction costs and may improve affordability of selling (i.e. making it financially feasible to sell and move). It could also make sellers more flexible in negotiations – without needing to budget for hundreds of thousands in taxes, a seller might be willing to accept a slightly lower offer from a buyer, or at least not insist on passing the tax cost onto the buyer. Overall, suspending the tax would remove a major disincentive to sell, likely increasing market activity among high-end and investment property owners. It’s essentially a short-term boon for those individuals: more cash in their pockets from any sale and potentially a faster, easier selling process (since fewer deals would fall apart over the tax issue). One luxury real estate CEO bluntly said “ULA was a real mistake and is materially impacting the ability of people to build new housing” – highlighting that developers/sellers feel the tax has made doing business in LA significantly harder\. Lifting that burden, even temporarily, could re-open some projects or sales that were shelved.
That said, sellers also recognize any pause might be temporary. If they expect the mansion tax could return later, they may rush to sell during the hiatus. This could front-load some sales into the suspension period. Additionally, while sellers would celebrate a tax break, housing advocates might object that this favors wealthy property owners at the expense of affordable housing funding. Those opposing the pause could argue that wealthy sellers are getting a windfall (by avoiding a tax they can afford), whereas the city programs for low-income Angelenos would lose funding. Sellers, of course, will be primarily focused on their own financial outcome – and a ULA suspension greatly improves that outcome for anyone in the over-$5M bracket.
Impact on Home Buyers
For home buyers, the effects of Measure ULA’s potential pause are a bit more indirect but still significant, especially in the luxury segment. Buyers of properties under $5 million were never directly impacted by the tax (it doesn’t apply to their purchases), so the typical middle-class homebuyer wouldn’t see a direct change in transaction costs. However, buyers in the high-end market (luxury homes) have absolutely felt the ripple effects of ULA. The sharp drop in listings and sales of $5M+ properties meant much tighter inventory and fewer options for buyers shopping at the top of the market. Some prospective buyers found that owners of the kind of home they wanted simply weren’t selling. Others found that deals became more complicated – for instance, sellers tried to push the tax cost onto buyers through higher prices or negotiations, which could deter buyers or blow up deals. There are reports that wealthy buyers started looking outside the City of Los Angeles to avoid the tax burden entirely
. Surrounding communities without a mansion tax (Beverly Hills, Santa Monica, Orange County, etc.) became more attractive for those in the market for luxury real estate, as they could purchase a comparable property without footing the bill for LA’s transfer tax (either directly or indirectly). In short, ULA contributed to a cooling of buyer interest within the city, because the highest-end inventory dried up and the cost structure was less favorable compared to other locales.
If Measure ULA is paused, high-end home buyers in LA would stand to benefit from a reinvigorated market. First, more owners would likely list their homes, so buyers would enjoy more inventory and choice. A broader selection of luxury properties could also ease upward pressure on prices for that segment – with more competition among sellers, buyers might face less price inflation that had occurred when sellers tried to recoup the tax. Even though the ULA tax is legally owed by the seller, in practice a seller facing a 4–5% tax might have been factoring that into the deal (for example, by insisting on a higher gross price or less willingness to cover repairs/credits in escrow). With the tax off the table, buyers may find sellers more amenable to negotiation, possibly leading to better purchase prices or terms.
Additionally, a number of buyers who avoided Los Angeles due to the mansion tax might re-enter the market. Real estate agents noted that ULA “put a damper on luxury home sales, prompting wealthy prospective buyers to look elsewhere”
. If that damper is lifted, some of those buyers could return, especially if they perceive the pause might be temporary – it could feel like a limited chance to buy in LA without the tax factor. This might actually increase demand in the luxury segment in the short term (as outside buyers come back), but given that supply would also be increasing (more sellers listing), the market could see more overall transaction volume without a huge spike in prices. In essence, market activity becomes more fluid and balanced, which is generally positive for buyers and sellers alike.
For buyers at lower price points (well under $5M), the effect is more about the overall health of the market. A stagnant luxury market can have a trickle-down effect on the rest of the housing ecosystem. For example, if an owner of a $6M home can’t sell it (due to ULA and other factors), they may not move up or move out, which in turn means they aren’t buying another home (perhaps a $3M home), which then means the $3M home seller isn’t able to move, and so on. By freeing up the top end, a pause might gradually unlock transactions down the chain. This could increase mobility in the market, allowing people to make housing changes that were bottlenecked. Over time that can improve opportunities for buyers in lower tiers as well, via increased trade-up activity and more inventory filtering down.
It’s important to note that housing affordability, in the sense of median home prices and opportunities for first-time buyers, won’t be directly improved by eliminating a tax that only hits $5M+ properties. The mansion tax was never charged on moderately priced homes, so its pause doesn’t reduce the price of an average home. However, there is an indirect affordability consideration: Measure ULA’s revenue was earmarked for affordable housing programs (like rent relief and new affordable units). If those funds shrink during a pause, low-income renters and aspiring homebuyers who rely on affordable housing initiatives could be adversely affected. That broader policy impact is addressed later, but from a pure market standpoint, home buyers active in the market would likely see a more active and dynamic market with ULA on hold. More sales happening can lead to a healthier market environment – one where prices find their level based on fundamentals (income, interest rates, etc.) rather than being distorted by an added tax friction. In summary, while the average buyer might not notice a direct dollar savings from a ULA suspension, they would likely benefit from the increased supply and market fluidity that could improve the overall buying experience in Los Angeles’s higher-end market.
Impact on Real Estate Agents and Market Activity
Los Angeles real estate agents and brokers have been on the front lines of adapting to Measure ULA, and most have witnessed a significant slowdown in business since the tax took effect. The luxury segment, which often provides substantial commissions and drives brokerage revenue, nearly ground to a halt. By late 2023, commercial and luxury residential sales volume in LA was only about 15–20% of what it had been a year prior
, a staggering drop. An analysis by Colliers showed that in the quarter after ULA began, overall sales of properties over $5M in LA plummeted – for example, quarterly commercial sales went from $2.4 billion pre-ULA to just $260 million post-ULA
. “The transaction volume has fallen off… roughly 15% to 20%, optimistically, of where it was” year-over-year, noted one commercial brokerage vice chair in mid-2023
. For real estate professionals, fewer transactions mean fewer opportunities to earn commissions, and a tougher environment to close deals that do start. Agents have had to scramble to find creative solutions: some negotiated deal structures to minimize the tax’s impact, others shifted focus to neighboring markets outside LA city, and many simply saw clients postpone plans.
Real estate industry leaders have been vocally critical of Measure ULA, describing it as a deal-killer. One investment firm principal stated bluntly, “It’s basically really shut down the market”
. Developers argue that ULA disincentivizes building in LA, with one CEO saying “ULA was a real mistake and is materially impacting the ability of people to build new housing”
. The general sentiment among brokers, luxury agents, and commercial real estate professionals is that the tax has hurt LA’s competitiveness. They point out that investors now favor areas without such a tax, and even lenders are wary (since ULA taxes can even be triggered in foreclosures, adding tens of millions in costs in some cases)
. The real estate community (including groups like the California Realtors Association and commercial real estate coalitions) largely opposed Measure ULA from the start and have lobbied against it
. They supported efforts to overturn it via the courts and legislation
. So, it’s no surprise that most real estate professionals would likely welcome a pause or repeal of the measure.
If Mayor Bass successfully pauses Measure ULA, the immediate impact for agents and brokers would be a likely uptick in business. As discussed, many sellers and buyers who sat on the sidelines would re-engage, leading to more listings, more showings, and more transactions closing. Market activity could rebound quickly, even if temporarily. This surge would directly benefit agents’ earnings and could also have a psychological boost: it would signal that Los Angeles is trying to revitalize its real estate market, possibly restoring some investor and developer confidence. Agents could more easily solicit high-end listings (“Now is a good time to sell, since the mansion tax is on hold”) and encourage buyers to look in LA again. In essence, a ULA suspension might unclog the pipeline of deals that had been frozen, which is a very positive development for anyone in real estate sales.
However, agents would also be aware that a pause is not permanent (unless it leads to a full repeal down the line). This means there could be a flurry of activity during the suspension and then a potential slowdown if the tax is reinstated. Such whiplash in the market is not ideal for long-term planning – it creates an uncertain climate where everyone times their moves around tax policy deadlines rather than market fundamentals. Nonetheless, most professionals would prefer some sales (with a future slowdown) than no sales at all for an indefinite period. Importantly, even with ULA paused, underlying issues like high interest rates and economic conditions would still influence the market. Some experts have noted that the luxury market was already cooling due to higher financing costs, and ULA then poured “gasoline on the fire” of that slowdown
. Removing ULA won’t solve high interest rates, but it removes one significant barrier to transactions, which could be enough to get the market moving again to a healthier level.
In sum, real estate agents and brokers in LA are likely to strongly support pausing Measure ULA, as it would lower transaction costs and potentially revive the volume of deals. The broader market activity would pick up – good for agents, and arguably good for the local economy (think of all the ancillary services that benefit from real estate sales: escrow, title, contractors, movers, etc.). One caveat is that the uncertainty around the tax’s future might still give some buyers or investors pause – they might worry that even if they buy during the suspension, the tax could exist again when they go to sell in the future. This could slightly temper the positive effects, but generally a tax holiday now is better than nothing. As one finance expert summarized the situation: City leaders thought the tax would be a windfall “and not create this impediment to transactions… Now the city is saying, ‘Oops’.”
Real estate practitioners would be relieved to see the city correct course, even if only partially, to remove that impediment and let the market breathe again.
Affordability and Broader Housing Market Considerations
While much of the focus is on market activity and stakeholder impacts, it’s important to step back and consider the policy trade-offs and broader trends tied to pausing Measure ULA. The measure was fundamentally about housing affordability – using a tax on the wealthiest real estate dealings to fund programs for those most in need. In its first year, ULA revenue (though underperforming expectations) has been directed to things like rent relief for low-income tenants, eviction prevention, and the production of affordable housing units
. Mayor Bass’s administration itself touted Measure ULA as an “extraordinary opportunity” to tackle homelessness and housing insecurity by generating new funding
. Therefore, any suspension of ULA carries an implicit trade-off: less money for housing programs versus a boost in real estate market fluidity. The legal pause that Bass is considering would likely be temporary, but even a temporary halt means the city might collect tens or hundreds of millions less in tax that would have gone to homelessness prevention or housing construction. For example, in just the first four months of ULA, the city raised about $55 million (which was only 25% of the target for that period)
; a pause could similarly subtract tens of millions per quarter that would otherwise accrue going forward. City officials had to dip into other funds to cover some promised housing initiatives when ULA fell short, and a further shortfall from a suspension could delay or scale back these initiatives. Housing advocates would likely argue that pausing ULA undermines the will of voters who approved it to address LA’s housing crisis, and that it prioritizes high-end market convenience over the city’s most vulnerable residents.
On the other hand, proponents of pausing (or repealing) ULA suggest that housing affordability is not served by a paralyzed real estate market. If developers won’t build in Los Angeles because of the tax, that reduces the overall housing supply (including market-rate and potentially mixed-income projects), which can worsen affordability in the long run. There is evidence that ULA affected all segments of real estate, not just mansions – commercial and multifamily development deals were hit hard
. Billions of dollars’ worth of projects and property transactions did not happen as a result of the tax, according to industry estimates
. Some experts liken it to “redlining” Los Angeles, as investors simply drew a red line around the city and took their capital elsewhere
We should also view this in the context of broader real estate trends and public policy. Los Angeles is not alone in experimenting with a “mansion tax” – cities like New York, San Francisco, and others have transfer taxes, and places like Boston have debated similar measures
. The early outcome in LA – a big drop in sales and much lower revenue than expected – is being watched by other jurisdictions. As one article noted, business groups (especially realtors) tend to strongly oppose these taxes, often successfully lobbying against them
. In Boston, for example, repeated attempts to enact a mansion tax failed after pushback
. In Santa Fe, as mentioned, a mansion tax was struck down in court on legal grounds
. LA’s experience thus far might serve as a cautionary tale: it illustrates how sensitive real estate markets are to added transaction costs, and how even well-intentioned taxes can cause behavioral shifts that thwart the policy’s goals. Wealthy individuals and companies have mobility; they can choose to invest or live elsewhere if one city’s costs get too high. Indeed, LA agents have observed “wealthy prospective buyers” simply looking outside the city, and developers have reallocated investments to other cities without such taxes. This trend can contribute to an out-migration of economic activity, which over time could reduce LA’s tax base in other ways (like less property tax growth, fewer jobs, etc.). Pausing ULA could be seen as an attempt to stem that outflow and strike a better balance.
In terms of market affordability, pausing the tax will not suddenly make LA homes inexpensive – the fundamental issue of high home prices relative to incomes is driven by supply, demand, and regional factors (land values, zoning, etc.) more than this one tax. However, by reviving transaction activity, a pause might prevent further constriction of supply. Also, the funds from ULA – while important – were not the sole solution to the housing crisis; they were a supplement to other efforts. If the market picks back up, the city might explore alternative funding mechanisms that are less disruptive (for instance, bonds or broader-based taxes spread more evenly). Notably, local governments only have certain tools at their disposal for raising revenue for housing
. LA chose a transfer tax because it could be implemented via voter initiative. If that tool proves too damaging to the market, the city may need to pivot to other strategies (which could be part of why Mayor Bass is open to suspension while seeking other funds, especially in emergencies like wildfire recovery).
In conclusion, pausing Measure ULA presents a trade-off between short-term market stimulation and the temporary loss of dedicated affordable housing funds. The legal ability of Mayor Bass to enact such a pause is uncertain and likely limited without voter action
. But if it were achieved, the effects would be felt across Los Angeles’s real estate landscape: Home sellers would rush to take advantage of lower transaction costs, luxury home buyers would see more choices and potentially better deals, and real estate agents would enjoy a much-needed revival of sales activity. The market overall could regain some momentum, helping to correct the extreme slowdown that followed ULA’s implementation. Yet, this would come at the cost of delaying or reducing housing programs that rely on the tax revenue, which has important implications for housing affordability efforts. City leaders and stakeholders would have to weigh these factors. As of now, Mayor Bass has only signaled an intention to explore a suspension, and is proceeding cautiously by consulting legal counsel. Any move to pause the mansion tax will undoubtedly be scrutinized by both industry experts and housing advocates, given its wide-ranging impact. Los Angeles finds itself in a delicate balancing act: trying to support its real estate market’s health while also delivering on promises to address an affordability crisis – two goals that Measure ULA has intertwined in a complex, and now controversial, way.
Sources:
- Los Angeles City Charter provisions on voter-approved measures
- The Real Deal – “Bass says she wants to pause Measure ULA. Is she allowed?” (Mar. 17, 2025)
- Los Angeles Business Journal – “Redlining Los Angeles: Sales Plunge Following Measure ULA’s Introduction” (Oct. 2023)
- The Real Deal – “A year into Measure ULA, a stiff real estate market in the city” (Apr. 1, 2024)
- Route Fifty – “States, cities consider ‘mansion taxes’ to fund affordable housing” (July 2024)
- Mayor of Los Angeles – Press Release (Oct. 27, 2023): “Mayor Bass… Applaud Decision Dismissing Measure ULA Lawsuit”