The scarcity of luxury home sales in Los Angeles continued for the second straight month and improved slightly in May.
From May 1 to May 30, the City of Los Angeles recorded 10 transactions priced at more than $5 million. About 17 homes in that price range came under contract in Los Angeles this month, according to research from Pacific Palisades’ Amalfi Estates agency.
In April, as the city implemented the ULA transfer tax measure on real estate transactions, there were just two transactions over $5 million. That compares with an average of 50 transactions above $5 million a month over the past two years, said Anthony Marguleas, founder of Amalfi Estates.
“It’s not the 50 deals we’re used to seeing,” Marguleas said of the Los Angeles market. “But we’re headed in the right direction, even with the Writers Guild strike, debt ceiling concerns and recent bank failures.”
Eric Sussman, a professor at UCLA’s Ziman Center for Real Estate, said Los Angeles’ luxury home market hasn’t been this slow in recent memory, but he doesn’t lay the blame entirely on the ULA, which charges an extra 4 percent on transactions over $5 million. 5.5% for transactions over $10 million in fees.
“There’s no doubt that it’s a huge tax. There are many other headwinds, such as higher interest rates, political uncertainty and [the question] Will we experience a recession? I think it’s a combination of factors,” he said.
Cities that don’t deal with ULA taxes are also feeling the constraints of the market. Rochelle Atlas Maize and Steve Bohbot of Nourmand & Associates recently represented the seller in the $14.4 million sale of 513 N. Bedford Drive in Beverly Hills. Buyer was represented by Josh Flagg.
“There are spillover effects,” Corn said. “You’d think it would make prices higher in Beverly Hills because you don’t have taxes. But the overall sentiment in the market is slipping. Buyers aren’t buying because they think prices are going to go lower. Sellers (in the city of Los Angeles) are marginalized, Because they don’t want to pay taxes.”
She noted that sales of homes priced over $10 million have declined in the upscale Beverly Hills apartment community. Between January 2022 and May 2022, about 15 Beverly Hills condos sold for more than $10 million. During the same period in 2023, only six sales will be recorded, according to Maize research.
She estimates her income has dropped 30% since May 2022, as she conducts more business by renting out homes rather than selling them. “The only thing stabilizing the industry is a supply shortage,” Corn said of the Los Angeles market.
