By all measures, there was a surge in activity and sales in Los Angeles’ luxury home market before the April 1 deadline when the ULA tax took effect.
But despite the frenzy, some agents didn’t think it was a bonanza.
Jade Mills of Coldwell Banker Realty sold three luxury listings in the month before the tax deadline. There were forecasts that the ULA tax would spark a big surge in sales for trophy homes. But many buyers sought giant discounts, some up to 20 percent, she said.
“Many of my sellers did not need a fire sale. They were not desperate,” Mills said. “If a house was listed at $25 million, it did not make financial sense for the seller to sell for $17 or $18 million. Paying the 5.5 percent tax would be better for the seller than to take a 10 to 15 percent discount on the purchase price.”
Brian Bogulski, an agent with Amalfi Estates, a boutique firm based in Pacific Palisades, agreed there was a big rush for discounts. “It brought out a lot of bottom feeders looking for deals from desperate sellers,” he said.
An MLS search conducted by Amalfi Estates found that 99 transactions for single-family homes and condos priced above $5 million sold in the city of Los Angeles in March. It about tripled the 32 luxury sales in the previous month of February. In a year-over-year comparison, March 2023 sales were almost double the 53 closings in March 2022 for Los Angeles residences of $5 million or more. A Douglas Elliman report noted that there was a surge of new contracts for single-family homes in L.A. county during February.
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Some of the pre-tax deadline frenzy for luxury home sales was spurred by big promotions. One of the most prominent was a $1 million bonus to the buyer’s agent who would close a deal for 1035 Stradella Road in Bel-Air. Mills and Josh Altman of Douglas Elliman represented a seller who promised the million-dollar bonus. The house did not sell by the deadline, but Mills reported fielding 30 showings, which was one of the largest numbers of requests for trophy home showings in her recent memory. The sale of the home was hampered because it did not have a certificate of occupancy before the ULA tax deadline. 1035 Stradella Road got its certificate of occupancy on April 3, days after the tax became operative.