In 2022, Los Angeles voters approved Measure ULA, a “mansion tax” that placed a significant transfer tax on high-value real estate transactions — 4% on properties between $5 million and $10 million and 5.5% on those above that threshold. Designed to generate funds for affordable housing and homelessness prevention, the measure has since raised over $800 million for city programs.

But as the tax’s financial impact grows, so does the controversy surrounding it — and now, the debate may soon move beyond Los Angeles.

A Statewide Challenge to Local Real Estate Taxes

The Howard Jarvis Taxpayers Association, a long-standing anti-tax advocacy group, is currently gathering signatures for a 2026 statewide ballot measure that could limit or eliminate taxes like Measure ULA across California. The proposed constitutional amendment would:

• Cap transfer taxes at a fraction of current levels — roughly 0.05%, compared to Los Angeles’ top rate of 5.5%.

• Raise the voter threshold for approving new local tax measures from a simple majority to two-thirds, making future increases much harder to pass.

If approved, this initiative would roll back voter-approved “special taxes” and dramatically reduce city revenue from property transfer fees. Municipalities from Los Angeles to Berkeley could collectively lose billions of dollars in annual revenue — funds many cities rely on for housing and infrastructure.

The Impact on the Los Angeles Real Estate Market

For Los Angeles property owners and developers, the ripple effects of Measure ULA have already been felt. Luxury home sales slowed noticeably after the tax took effect in 2023, and new multifamily construction has also declined.

A UCLA-Rand study estimated that the measure may have resulted in nearly 2,000 fewer apartment units per year, while another study found that falling sales activity has offset a large portion of the tax’s revenue gains. Critics argue that ULA discourages investment and worsens housing shortages, while supporters maintain it’s a vital source of funding for affordable housing programs — funds that are only now beginning to be distributed.

The debate over Measure ULA has also sparked renewed conversations in Sacramento. Proposed legislation this year would have offered exemptions for new residential developments and wildfire-affected homes, but those efforts stalled. Lawmakers are expected to revisit the issue in 2026.

What This Means for Los Angeles Homeowners and Investors

For luxury homeowners, investors, and developers, the outcome of this statewide initiative could significantly reshape the market. A rollback of transfer taxes would likely:

• Encourage more high-value sales, particularly in Los Angeles’ ultra-luxury segment.

• Stimulate development, especially in multifamily and mixed-use projects currently burdened by ULA’s costs.

• Reignite buyer demand, as sellers become more willing to list high-value properties without the added tax penalty.

However, cities may need to find new revenue sources if the measure passes — potentially through higher property assessments or alternative taxes — creating new challenges for municipal budgets.

The Bottom Line

Whether you view Measure ULA as a lifeline for affordable housing or a deterrent to economic growth, there’s no question it has reshaped the Los Angeles luxury real estate landscape. With a statewide initiative now on the horizon, homeowners and investors should stay informed — these decisions could have long-lasting implications for property values, development, and the overall health of California’s real estate market.

Source: Cal Matters

Suzanne Dyer
Top Luxury Realtor – Palos Verdes & South Bay
Strand Hill | Forbes Global Properties
📞 310-528-7480 | 🌐 www.SuzanneDyer.com