Luxury home sales recovering after Los Angeles 'mansion tax', says Josh Altman

Los Angeles has what many are calling a "mansion tax," an additional tax on properties that sell for $5 million or more. The tax started being imposed on April 1. Josh Altman, Co-founder of The Altman Brothers team tells Yahoo Finance Live that after a slow April, the sale of luxury homes in the city of Los Angeles showed some signs of recovery in May.

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Video Transcript

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SEANA SMITH: As part of our week long series "Real Estate, The New Reality," we're taking a look into the world of the high-end housing market. Luxury homes had a rough start to the year, began with sales in the US seeing a decline of just about 44%. That's according to the latest numbers from Redfin, but where does the high-end real estate market stand now? Here to discuss, we want to bring in the Altman Brothers Team co-founder Josh Altman.

Josh, it's good to see you here. So from those numbers, at least from Redfin, it looks like the luxury market was off to a strong start to the year. Where does it stand today?

JOSH ALTMAN: Well, I can tell you about California as I'm sitting in my car out front of a listing because I got a big showing, which is always a good sign. We are at about 20% down compared to last year of May 2022. In LA County, there was about 4,200 sales total up to this point. This year at about 32%, so we're 20% down with that.

But I will tell you the biggest question, of course, was the ULA measure that was passed. Good news is that even though we had an extremely slow April, May has doubled and June is looking like it's going to double that. In April of this year, properties over $5 million in the ULA measure areas, which is that new tax that was passed, there was only about 10 sales that month, which was extremely slow.

And then the next month afterwards, we had about 20. And it looks like we're going to have about 30 sales now in the ULA area. So listen, we're all super hopeful about it. That's what I can say here over in Los Angeles.

DIANE KING HALL: So we've definitely seen some of that pressure here on the East Coast as well, Josh. Diane here right now. So you're seeing that dramatic impact to luxury real estate on whether you're talking about California or New York. Speaking specifically to California, is there-- what is happening to pricing as a result of this drop in demand for luxury real estate?

JOSH ALTMAN: Well, look, I mean, of course, across the board, the buyer mentality is all about a deal these days. But with everything continuing to move which is good, believe it or not, May was our strongest month with closings. So that actually shows that our next very strong month is probably going to be somewhere around July. Because if you look at the most openings, which were in March, it's all, kind of, in line here two months afterwards. So that's all good stuff as well.