In April 2023, Los Angeles set out to solve one of its most enduring crises — the shortage of affordable housing — by taxing the sale of its most valuable properties. Three years on, the RAND Corporation has found that the policy achieved something closer to the inverse of its intent: thousands of homes unbuilt, tens of thousands of construction jobs lost, and a city that collected less than half the revenue it expected. The story of the ULA tax is, in many ways, a parable about the distance between a policy's moral ambition and its material consequences.
LA mansion tax backfires: 9,100 homes blocked, 16,650 jobs lost, $452M in revenue vanished
16,650 construction jobs eliminated due to reduced development activity.
You are taxing housing to pay for housing.
Mark
So the tax was supposed to fund affordable housing, but it actually blocked affordable housing from being built. How does that happen?
Mimi
The tax adds a 4 to 5.5 percent cost to any property sale above certain thresholds. For developers, that's on top of already-thin profit margins. Some projects stop making financial sense. Owners also hold onto properties rather than sell them and trigger the tax. Fewer transactions means fewer opportunities to build anything.
Luke
But the RAND report—how isolated is their finding from other economic factors? Interest rates were high, the broader market was cooling. How much of that 31 percent decline is actually the tax versus just the economy?
Mimi
RAND did account for other economic factors. But you're right to push back. Researchers at Occidental College argue the slowdown in apartment construction was part of a wider trend. It's hard to isolate the tax's impact completely.
Mark
And the city is using the money it did collect to preserve existing units rather than build new ones. Is that a failure?
Mimi
It depends. Michael Manville said keeping units that are at risk of being declared uninhabitable could be a policy win if the cost is low. But some of those buildings have serious problems. The Renato Apartments got $100,000 while tenants were dealing with bedbugs, cockroaches, and sewage leaks.
Luke
So the city is spending ULA money on buildings that are losing money and may collapse anyway. How much of the $1.2 billion actually went to new construction versus preservation?
Mimi
The city allocated $324 million from ULA for affordable housing in September. But the breakdown between new construction and preservation isn't fully clear from the reporting. That's part of why Councilwoman Padilla is pushing for quarterly reports.
Mark
Raman championed this tax. Now she's trying to reform it. What changed?
Mimi
She acknowledged the policy was stalling housing production and undermining its own goals. She proposed a 15-year exemption for new apartment and mixed-use projects, but it failed to make the ballot.
Luke
Did it fail because the proposal was weak, or because the groups that backed the original tax—labor unions, affordable housing advocates—opposed exempting new development?
Mimi
The reporting says it faced "fierce opposition from labor and pro-ULA groups." So yes, the very constituencies that pushed for the tax in the first place blocked the reform.
Mark
What happens next?
Mimi
Applications for the $466.6 million funding round open October 13. And voters decide whether Raman becomes mayor three weeks later. That timing matters—she's running on a housing platform while her signature policy is widely seen as having backfired.
El Pulso
- A transfer tax designed to extract wealth from luxury real estate and redirect it toward the poor has instead frozen the very market it sought to tax, deterring 31% of high-value sales and nearly half of all apartment and commercial transactions.
- The human toll is concrete: 16,650 construction workers lost full-time jobs as developers abandoned projects whose margins could no longer absorb a 4–5.5% tax hit on top of already punishing labor and material costs.
- In a bitter irony, roughly 1,000 of the 9,100 blocked homes would have been affordable units — the precise outcome the tax was engineered to produce — prompting one UCLA urban planning chair to call it 'robbing Peter to pay Paul.'
- The city collected $1.2 billion but spent only $114 million of it by May, and some of what was spent flowed to housing organizations managing buildings where tenants reported bedbugs, rats, sewage leaks, and human waste.
- Councilwoman Raman, who championed the tax as a historic first, now supports exempting new construction from it for 15 years — a reform that failed to reach the June ballot — while she simultaneously runs for mayor as applications for $466.6 million in ULA funds open October 13.
In April 2023, Los Angeles set out to solve one of its most enduring crises — the shortage of affordable housing — by taxing the sale of its most valuable properties. Three years on, the RAND Corporation has found that the policy achieved something closer to the inverse of its intent: thousands of homes unbuilt, tens of thousands of construction jobs lost, and a city that collected less than half the revenue it expected. The story of the ULA tax is, in many ways, a parable about the distance between a policy's moral ambition and its material consequences.
Los Angeles launched the United to House LA transfer tax in April 2023, charging sellers 4 percent on properties above $5.4 million and 5.5 percent on those above $10.9 million. Championed by Councilwoman Nithya Raman as a way to make the wealthy subsidize the city's housing crisis, it was billed as a historic intervention. Three years later, a RAND Corporation report tells a different story.
Instead of the projected $2.7 billion, the tax raised roughly $1.2 billion — less than half. High-value property sales fell an estimated 31 percent; apartment and commercial sales dropped more than 46 percent. The math was simple and brutal: the added cost made deals financially unworkable for developers already operating on thin margins. RAND found the tax blocked 9,100 homes, eliminated 16,650 construction jobs, and cost the city $452 million in lost revenue. About 1,000 of those blocked homes would have been affordable units — the tax's stated purpose. UCLA urban planning chair Michael Manville called it 'robbing Peter to pay Paul.'
The city was also slow to deploy what it did collect. By May, only $114 million of the $1.2 billion had been spent. Some of that money went to preserve existing affordable units rather than build new ones, including $2 million to SRO Housing Corp. — an organization that has lost $27.8 million since 2022 and manages buildings where tenants have alleged infestations, sewage leaks, and human waste.
Raman has since acknowledged that the policy 'unintentionally stalls housing production' and proposed exempting new construction from ULA for 15 years. The reform failed to reach the June ballot. Mayor Karen Bass has also wavered, attempting to rewrite the tax in Sacramento before withdrawing under pressure. In September, the City Council unanimously allocated a record $466.6 million toward affordable housing, with $324 million drawn from ULA funds. Applications open October 13 — three weeks before voters decide whether Raman herself becomes mayor.
Los Angeles imposed a transfer tax on high-value properties in April 2023 with the stated goal of funding affordable housing. The tax, officially called United to House LA or ULA, charges sellers 4 percent on properties selling above $5.4 million and 5.5 percent on those above $10.9 million. It was championed by Councilwoman Nithya Raman as a way to tax the wealthy and address the city's housing shortage. Three years in, a report from the RAND Corporation found the policy has produced the opposite effect: it blocked the construction of 9,100 homes, eliminated 16,650 full-time construction jobs, and cost the city $452 million in lost revenue.
The tax was projected to raise roughly $900 million annually, or $2.7 billion over its first three years. Instead, it has collected about $1.2 billion—less than half the forecast. RAND's analysis documented a sharp decline in property transactions since the tax took effect. High-value property sales dropped an estimated 31 percent through early 2026, while apartment and commercial sales fell more than 46 percent. The mechanism is straightforward: the added cost makes deals financially unworkable for developers already operating on thin margins, and it discourages property owners from selling because the tax burden is substantial. A Brentwood property illustrates the real-world impact. The land sold for $5.3 million in February 2023, just before ULA took effect. A new home was built on the site and listed at $19.995 million last December. After three price cuts, it sits at $15.995 million. If it sells at that price, the ULA tax bill would be approximately $880,000.
Perhaps most damaging to the tax's original purpose: about 1,000 of the 9,100 blocked homes would have been affordable units—precisely what the tax was designed to create. Joel Berner, a senior economist at Realtor.com, explained the dynamic plainly. Builders already face high labor and material costs, he said. The transfer tax squeezes their margins further, leading some to abandon projects that no longer pencil out financially. Developer Barry Cassily framed it bluntly: "You are taxing housing to pay for housing." Michael Manville, who chairs UCLA's urban planning department, called the outcome "robbing Peter to pay Paul." The city has deterred hundreds or thousands of market-rate units while funding far fewer affordable ones, he argued, ultimately harming affordability rather than helping it.
The city has been slow to deploy the revenue it did collect. As of May, the city had spent just $114 million of the roughly $1.2 billion raised—less than 10 percent. In September, the City Council voted 13-0, including Raman, to allocate a record $466.6 million toward affordable housing, with $324 million of that coming from ULA funds. But even this spending carries complications. In April, the city steered $55.5 million toward preserving 3,713 existing affordable units rather than building new ones. One recipient, SRO Housing Corp., received $2 million across 11 buildings. The 96-unit Renato Apartments got $100,000. In a 2024 lawsuit, tenants alleged the building suffered from bedbugs, cockroaches, rats, sewage leaks, and human waste. SRO Housing has lost $27.8 million since 2022 and warned the city it will collapse without additional public funding.
Raman, who championed the tax as "the first housing initiative of its kind anywhere in the United States that will have such a widespread, immediate, and long-term impact," has since shifted position. Earlier this year, she proposed exempting newly built apartments, commercial, and mixed-use projects from ULA for 15 years, acknowledging that "a policy that unintentionally stalls housing production ultimately undermines the very goals voters asked us to achieve." The proposal failed to make the June ballot amid opposition from labor unions and ULA supporters. Mayor Karen Bass has also wavered. Last year she attempted to rewrite the tax in Sacramento, then withdrew the bill after backers objected. Weeks later, after meeting with developer Rick Caruso, she asked the council to grant Palisades fire victims a three-year exemption.
Critics from across the spectrum have questioned the tax's design. Westside real estate broker Danny Brown called it "another disaster initiated by the incompetent socialists who run our city," arguing it has "chopped the legs from under the residential and commercial real estate industry." Luxury broker Jason Oppenheim, who stars on Netflix's "Selling Sunset," pointed to RAND data suggesting as many as 10,600 apartments were deterred while only roughly 1,900 new units received ULA funding. Even those 1,900 units come with caveats—ULA typically funds only one component of affordable housing projects. Manville compared the city's accounting to old cereal advertisements claiming to be "part of this nutritious breakfast." "It is a part of that breakfast," he said. "But, like, how big of a part really?" Councilwoman Imelda Padilla, who took over the Housing Committee in August, has pushed for quarterly reports on fund allocation. Applications for the $466.6 million funding round open October 13, three weeks before voters decide whether Raman becomes mayor.
Citas Notables
A policy that unintentionally stalls housing production ultimately undermines the very goals voters asked us to achieve.— Councilwoman Nithya Raman, on her own mansion tax proposal
If for a small amount of money we can take some units that are at risk of being declared uninhabitable and keep them on the market, that could very well be a policy win.— Michael Manville, UCLA urban planning department chair
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