Two Years After Measure ULA: How is the Los Angeles Real Estate Market Now?

Measure ULA has taken effect since April 1, 2023.

Measure ULA, also known as the “Mansion Tax,” is a special real property transfer tax imposed by the City of Los Angeles, effective as of April 1, 2023. Unlike annual property taxes, this is an excise tax applied at the time of property transfer and is calculated based on the value of the real estate interest conveyed. While the City already imposed a base transfer tax of 0.45%, Measure ULA adds an additional layer—4% for properties sold above $5.15 million and under $10.3 million, and 5.5% for those sold at or above $10.3 million. Intended to fund affordable housing and tenant assistance programs, this tax significantly impacts high-value commercial real estate transactions and has introduced a layer of complexity that brokers, investors, and sellers must carefully navigate.

Now in the month of April of 2025, what has changed in the Los Angeles real estate market? What should investors and brokers keep looking out for in the upcoming months of the year?

Efforts in Fighting Housing Crisis

According to Shelterforce - a news reporting organization on affordable housing - since taking effect in April 2023, Measure ULA has begun to deliver on its promise of addressing Los Angeles’s housing crisis by generating $480 million in revenue to date. Though this is below the original projections of $600 million to $1.1 billion annually, it remains the city's largest single source of housing funds. In its first year, the tax has helped fund nearly 800 new affordable housing units across nine projects and provided emergency rental assistance to over 4,300 low-income households. 

The Unintended Consequences

Yet after two years, people have also noticed that the measure played a role in slowing or even reducing market activities as well. A recent report by the UCLA Lewis Center (April 2025) presents compelling evidence that Measure ULA—Los Angeles’s real estate transfer tax on high-value property sales—is having a significant dampening effect on commercial, industrial, and multifamily real estate activity. The analysis shows that Measure ULA led to a 30–50% decline in the number of transactions across these sectors and a 49–55% drop in sales above the tax threshold. This sharp decrease has also resulted in an estimated $25 million annual loss in property tax revenue, which is expected to grow if the measure continues without reform. Most notably, the report links the tax to a substantial decline in new multifamily housing production, estimating a loss of at least 1,910 units per year—a reduction of 18% from pre-ULA levels. Because these developments often include deed-restricted affordable housing, the report estimates a loss of at least 168 affordable units annually. Alarmingly, multifamily properties sold within 15 years of development contribute only 8% of ULA’s revenue, yet their taxation discourages housing production.

The study drew the conclusion that the tax, intended to fund affordable housing and fight homelessness, is undermining its goals by discouraging development and reducing the supply of deed-restricted affordable units by at least 168 per year. 

A Potential Reform

Research organization RAND has proposed remodeling of Measure ULA that improves effectiveness while preserving its core mission. They suggest that policymakers should pursue targeted reforms that fix its most damaging flaws. First, the tax structure should be redesigned to avoid the steep “cliffs” that currently penalize small differences in sale price with disproportionately large tax bills. Implementing marginal tax rates—similar to income tax brackets—would create a fairer, more predictable system. Second, exemptions for multifamily and commercial properties sold within 15 years of development would prevent the tax from stalling new housing and job-generating projects. This proposal also aligns with Lewis Center’s suggestion listed in their study. Finally, limiting the tax to single-family home sales over a certain threshold, or to properties that haven’t been sold or improved in many years, would better align ULA with its intended purpose as a “mansion tax” without discouraging reinvestment. 

While local lawmakers have limited authority to amend the measure, state intervention could provide the legislative clarity and flexibility needed to recalibrate ULA—helping Los Angeles fund housing initiatives without undermining development or long-term fiscal health. 

Tips for Investors and Brokers

For investors and brokers, Measure ULA’s continued impact on Los Angeles’ real estate landscape means navigating a more complex and cautious environment in 2025. With multifamily and commercial transactions down and development pipelines stalling, on top of economic uncertainties brought by tariff policies, brokers must stay alert to shifting investor sentiment and prioritize deals that avoid triggering the ULA tax thresholds—especially properties under $5.15 million or those located in neighboring cities without such levies. Investors, on the other hand, should watch for reform efforts that may alter the tax’s scope and consider the long-term implications of holding or acquiring assets in LA’s high-value segments. Strategic underwriting, tax planning, and a focus on submarkets or asset types less burdened by transfer taxes will be essential to preserving value and identifying viable opportunities in the year ahead.

As we move further into 2025, it’s clear that Measure ULA has become a defining factor in Los Angeles’s real estate landscape—one that offers both promise and friction. While it has helped generate hundreds of millions for housing efforts and provided much-needed assistance to thousands of Angelenos, its structural flaws have also triggered measurable slowdowns in development and investment. For brokers, investors, and policymakers, the path forward must balance funding solutions for housing insecurity with strategies that protect the vitality of the broader market. Whether through reform, exemption adjustments, or state-level intervention, evolving Measure ULA into a smarter, more targeted tool will be key to ensuring that Los Angeles can meet its housing goals without stalling the very engine that powers its growth.