In March, the Los Angeles luxury market was dominated by frenzied activity to wrap up sales in order to avoid the ULA tax. But the big surge to sell Los Angeles’ mansions took place in February.
Approximately 49 L.A. County homes priced $5 million or more went under contract during March, according to information culled from MLS in a report released by brokerage Douglas Elliman. That represents a 29 percent decline compared to March 2022, when contracts were signed for 69 such homes . The number of home listings in the $5 million plus price range was 127, about the same as last year.
In contrast, the previous month of February saw 57 top-end house sales, and the number of listings reached 185, a 46 percent increase from February of the previous year. Jonathan Miller, the author of the report, noted that new signed single-family contracts of more than $5 million rose 90 percent in a month-to-month comparison from January 2023 to February 2023.
Miller attributed that build-up to the looming implementation of the new Measure ULA transfer tax, which levies an extra 4 percent on real estate deals above $5 million. The tax went into effect on April 1, so sellers who wanted to avoid the tax had to complete transactions before that date.
“The bulk of high-end buyers saw February as the last chance,” Miller said. Since it usually takes a month or more to wrap up a sale, most deals that could be wrapped up the April 1 deadline took place before March.
The market is generally robust, Miller said. The collapse of the Silicon Valley Bank did not spook the L.A. market. Signed contracts through all price ranges in the L.A. County market increased 10 percent in a month-to-month comparison. There were 2,233 signed contracts in L.A. County in March compared to 2,013 in February.
David Kramer, president of Hilton & Hyland brokerage, focuses on high-end listings. He said the real issue on why signed contracts for luxury homes seemed to decline in March could be found in a lack of inventory. There are only so many trophy homes, even in Los Angeles.
“We have a lot of buyers,” he said. “We have a healthy market. People are still transacting. The prices are not unfair. The high end is going to have a very strong year.”
To beat mansion tax deadline, brokers offer $1M bonus for a quick buyer