Mansion tax anxiety? LA luxe home listings surge in January

In a market sector that is anxious over L.A.’s new mansion tax, there was an uptick in listings for luxury homes in January.

Overall, the Los Angeles home market saw a surge of new listings in January, as well as an uptick in new signed contracts, according to a new report by brokerage Douglas Elliman.

During the first month of 2023, 181 homes more expensive than $5 million entered the market. By comparison, in December, there were 65 new listings for homes priced north of $5 million on the market, the report found.

The $5 million threshold is where Measure ULA, the City of Los Angeles’ so-called mansion tax, kicks in. All properties above $5 million pay an extra 4 percent sales tax.

The calendar change from December to January had something to do with the increase in listings and a surge in new contracts, said Stuart Vetterick, an associate broker with Hilton & Hyland. December is traditionally slow while January is the month when people get back to selling homes.

He also said that sellers of Los Angeles luxe listings are putting their homes on the market to beat the April 1 deadline for the mansion tax’s implementation. But it’s unclear if January’s listings surge was solely a result of the tax.

“It’s not black and white,” Vetterick said. “Some people pulled their listings off the market for the winter holidays and put them back on the market in January. Spring market is the best market. It’s the strongest market.”

He also noted that there are sellers who were planning to put listings on the market later in the year, but listed homes in January to beat the tax.

The residential real estate market also may have received some good news with the Federal Reserve’s interest rate hike on Feb. 2, said Stephen Kotler, chief executive officer for brokerage of Douglas Elliman’s Western Region.

It was widely predicted that the Fed would only raise rates by a quarter of a percentage point. “Because it increased as expected, the market felt stable,” Kotler said. “When people are unsure and they don’t know where the market is going, it is when they sit on the sidelines.”

In the total single-family home market, there were 1,826 new listings in January, ranging from below $300,000 to more than $5 million in Los Angeles, according to the Douglas Elliman report. It’s a big boost from December, when there were 1,151 new listings. It’s also a 7.3 percent increase in a year-over-year comparison from January 2022, when there were 1,702 listings.

The report also found that there were 1,565 new signed contracts in January, a miniscule increase compared to 1,541 in December. However there was a more than 40 percent decline in year-over-year new signed contracts. There were 2,044 new signed contracts in January 2022.

Also, Douglas Elliman reported that listings for L.A. condos surged to 651 listings in January, compared to 381 listings in December. There were 519 new signed contracts for Los Angeles condos in January compared to 484 new signed contracts in December.