Los Angeles Mayor Karen Bass claimed the city’s post-disaster recovery was the “fastest” in state history, but housing permit data tells a sharply different story, a Los Angeles housing crash. Since the passage of Measure ULA in 2022, the city has seen a two-thirds collapse in home construction approvals.
Permitting fell from 15,285 homes in 2022 to 11,272 in 2023—the first year the 4% real estate transfer tax took effect. In 2024, permits dropped again to 8,705. So far in 2025, just 1,325 homes have been permitted in the first quarter, putting the city on track for only 5,300 this year—a 65% drop since the tax was enacted.
Measure ULA, passed to fund nonprofit housing developers, exempts those very groups from the tax while hitting private development hard. Mott Smith, a real estate professor at USC, stated bluntly: “Housing production is down everywhere, but it’s nearly dead in Los Angeles.” Smith’s analysis suggests the tax has worsened both housing affordability and the city’s fiscal outlook.
His report, co-authored with the UCLA Lewis Center, found a 50% drop in sales of properties above the $5 million threshold, reducing the tax base and costing Los Angeles an estimated $25 million annually in lost property tax growth. Due to California’s Prop 13, those losses compound over time as fewer properties turn over and reset tax values.
Smith warns that if trends continue, Measure ULA could cost Los Angeles hundreds of millions annually in lost property tax revenue—far outweighing the $300 million the tax brought in last fiscal year.
Despite the downturn, Mayor Bass indicated in her State of the City address a desire to streamline building processes. But builders remain frustrated with city red tape, including excessive delays and unnecessary requirements. One developer faced a months-long delay over a tree bond, only to discover the tree in question no longer existed.
With an $800 million budget shortfall looming for 2025–2026, Los Angeles may soon face the harsh consequences of a policy that has stifled both development and revenue growth.
