Hollywood Strike Watch Puts LA Resi on Alert

Hollywood’s back at it — the negotiating table, that is.

Three years after strikes hobbled the industry and had a trickle-over effect on real estate and many other businesses, the Screen Actors Guild – American Federation of Television and Radio Artists (SAG-AFTRA) are two weeks into negotiations with the Alliance of Motion Picture and Television Producers.

The Writers Guild of America (WGA) and Directors Guild of America (DGA), meanwhile, are set to start talks in March and May, respectively.

The gamut of negotiations raised the question of whether the region could see another round of strikes akin to 2023 (May to September for the WGA, and July to November for SAG-AFTRA).

Residential real estate agents are still reeling from the impact to deal flow that those work stoppages caused in submarkets such as Studio City, Mar Vista, Burbank and the Santa Clarita Valley. Should a fresh wave of strikes occur, they’d happen in a far different landscape for Los Angeles real estate than in 2023.

While the mansion tax was just getting started the year of the strikes, the longer-term impacts of Measure United to House L.A. are now being seen. That’s partly driven an attempt to create major exemptions from the tax for new construction.

And now agents must contend with questions of whether the proposed 2026 Billionaire Tax Act has legs. Fears of the one-time 5 percent state tax on individuals with net worths of $1 billion or more was enough to trigger some movement at the end of last year out of California.

The Agency’s Billy Rose connected the thread between the ripple effect luxury real estate has on the broader market and what’s happening in Hollywood.

“Hollywood is getting decimated. The top end is still doing well, but the middle is disappearing in terms of those in the entertainment industry that are working,” Rose said. “I was an entertainment lawyer and I was a talent agent and I hear from all of my friends that the business is getting more and more difficult.”

More on the “billionaire tax”

How real is the possibility of the billionaire tax getting on the ballot and then getting approved by voters?

That’s hard to say, but the proposal received a big push from Vermont U.S. Senator Bernie Sanders who rallied a crowd at The Wiltern this past week to show his support for the tax.

Some agents have seen clients look to get ahead of the tax should it pass, given it would be retroactive to Jan. 1 of this year.

That’s why Carl Gambino, founder of the Gambino Group at Compass, saw his team help several clients move to Florida late last year.

But it’s not just one tax or one factor that’s caused a shift in the market locally.

Gambino said the post-fires landscape and lingering issues with crime are part of it. There’s also the city’s mansion tax and rising insurance costs. On that last point, Gambino said he just saw an insurance quote for $200,000 on a home that would have historically cost $50,000.

While Gambino said he still believes in the L.A. market — he owns multiple properties in the area — the market doesn’t compare to what he and his team see in New York and Miami, where they’re getting multiple offers regularly and also seeing robust business in the off market.

Food for thought

One more point of consideration on Sanders, given his recent local visit.

Los Angeles mayoral candidates are gearing up for the June primaries.

The city saw the surprise entrance into the race of Fourth District Councilmember Nithya Raman as she goes up against incumbent Mayor Karen Bass. Sanders endorsed Raman in her 2020 campaign for the council seat.

He didn’t use Wednesday’s billionaire tax rally to get into other topics and he was in Stanford on Friday to talk about artificial intelligence with U.S. representative Ro Khanna. Still, should Raman pull off an endorsement from Sanders, it could prove to be a major boon for her campaign.