Mayor Karen Bass Considering Pause on Measure ULA: What It Means for LA Real Estate

Los Angeles Mayor Karen Bass has suggested she may pause Measure ULA, the controversial "mansion tax" that has significantly impacted LA's high-end real estate market. But can she legally do it? And more importantly, what does this mean for home sellers, buyers, and real estate agents in Los Angeles? Let’s break it down.

What Is Measure ULA?

Measure ULA (United to House LA) was passed by voters in 2022 and went into effect on April 1, 2023. It imposes a 4% tax on property sales over $5 million and 5.5% on sales over $10 million, with proceeds directed toward funding affordable housing and homelessness prevention programs.

However, the tax has fallen short of revenue expectations while simultaneously freezing the luxury real estate market. The City of LA initially projected $600–$900 million per year from ULA but has only generated around $300 million. Meanwhile, luxury property sales plummeted by nearly 70% in the year following its implementation.

Can Mayor Bass Legally Pause Measure ULA?

Legally, it’s unclear if Mayor Bass has the authority to unilaterally suspend a tax that was approved by LA voters.

Since Measure ULA was passed through a ballot initiative, only another public vote or a legal amendment can fully repeal or modify it. While Bass has suggested exploring ways to suspend the tax—especially to aid wildfire victims—such a move would likely face legal challenges.

The Los Angeles City Charter limits changes to voter-approved measures, meaning even if the mayor and city council agree, they may need to put the issue back on the ballot or find a legally sound method to justify the pause.

How Would a Measure ULA Pause Impact Home Sellers?

The biggest beneficiaries of a ULA pause would be home sellers in the $5M+ market, who have seen their ability to sell severely impacted by the tax. The ULA tax has discouraged many homeowners from listing their properties, leading to a sharp drop in high-end inventory.

If the tax is suspended:

• Sellers would save 4–5.5% on transaction costs, meaning $200,000+ on a $5M sale or $550,000 on a $10M sale.

• Many sellers who have been waiting on the sidelines may finally list their properties.

• More homes on the market could lead to faster transactions and more realistic pricing.

• Sellers would be less likely to push the tax burden onto buyers, making negotiations smoother.

A pause could unfreeze the market, leading to a surge of new luxury listings and closings—similar to the rush of sales seen right before ULA took effect in April 2023.

Impact on Home Buyers

For home buyers, especially those looking at properties above $5 million, a ULA pause could mean:

• More inventory to choose from as sellers return to the market.

• Lower listing prices as sellers become more flexible without needing to compensate for the extra tax.

• More negotiating power since fewer deals will include the tax being passed on to buyers.

• Increased buyer interest in LA—many buyers who looked outside the city due to ULA’s costs may reconsider buying within Los Angeles.

This move could revitalize the high-end market, making LA luxury real estate more competitive with nearby cities like Beverly Hills and Santa Monica, which do not have this tax.

What Does This Mean for Real Estate Agents?

For real estate agents, brokers, and industry professionals, a suspension of Measure ULA would be a game-changer:

• More high-end transactions would boost commission-based earnings.

• More listings and increased buyer activity would revitalize the market.

• Developers and investors may return to LA, leading to increased deals in commercial and multifamily properties.

• A healthier transaction environment means more opportunities for agents to close deals.

Luxury agents and brokers have been some of the loudest critics of Measure ULA, calling it a deal killer that has pushed buyers and developers to take their money elsewhere. If the tax is paused, LA’s high-end market could see a significant rebound.

Broader Implications: Affordability vs. Market Health

While pausing ULA would benefit real estate transactions, it’s important to consider the trade-offs:

• ULA funds affordable housing initiatives. If the tax is suspended, there will be less funding for rent relief and new affordable housing projects.

• Developers have argued that ULA hurts housing supply. If the tax is repealed or paused, it could encourage more multifamily construction and new housing development.

• LA leaders must find a balance. While affordable housing programs need funding, a stalled luxury market also affects the city’s overall economy.

What Happens Next?

As of now, Mayor Bass is consulting legal experts to determine if she has the power to pause ULA. If she moves forward, expect:

• Legal challenges from tax advocates.

• A potential ballot measure to officially modify or repeal ULA.

• Immediate reactions in the luxury market, with a surge in new listings and sales.

The next few months will be critical for LA’s real estate market, and if ULA is suspended, buyers, sellers, and agents should be prepared to act quickly.

Final Thoughts

Measure ULA was designed to address housing affordability, but it has crippled LA’s high-end real estate market instead. If Mayor Bass successfully pauses or modifies ULA, it could unlock billions in frozen transactions, bringing huge benefits for home sellers, buyers, and real estate professionals.

As the situation unfolds, staying informed is key. If you’re considering buying or selling in LA’s luxury market, now is the time to stay ahead of the curve and strategize your next move.