To help fund the $1.3 billion that Los Angeles’ city council believes it needs to house the homeless, the city decided to impose a “mansion tax” of 4 percent on the sales of any homes or commercial properties above $5 million and 5.5 percent on sales above $10 million. This was projected to bring in $900 million a year, funding most of the homeless program.
This home is currently on the market in Los Angeles for an asking price of $5.667 million. Many homes of this size are available for under $1 million in Houston and San Antonio and few are asking more than $2 million.
The reality is far different because planners, as usual, failed to take into account how their regulations and taxes would influence human behavior. In the month before the tax went into effect on April 1, 126 homes sold for more than $5 million. In the month since? Just two.
Homeowners were in a frenzy to sell homes before the new tax went into effect and offered free Bentleys or other luxury cars to anyone who would close the deal before April 1. As soon as April 1 arrived, property owners yanked houses off the market to avoid paying the tax. Some even reduced their prices to just below $5 million so they wouldn’t have to pay it.
What strikes me is that a $5 million home in Los Angeles doesn’t even seem like a mansion. While L.A. has plenty of $50 million to $160 million homes for sale that are true mansions, the $5 million to $10 million homes just look like a slightly larger than usual suburban home anywhere else. And that’s exactly what they are: similar homes in Houston or San Antonio are selling anywhere from $700,000 to $1.5 million with only a few asking more than $2 million.
This disparity is not because Los Angeles is a more desirable place to live than Houston or San Antonio. Los Angeles is no more desirable today than it was in 1970, when census data showed that median home prices in the urban area were 2.25 times median family incomes, compared with 1.95 times in San Antonio and 1.77 times in Houston. That’s nothing compared with the disparity in 2021, when Los Angeles urban area value-to-income ratios are 8.16 vs. 3.04 in Houston and 2.99 in San Antonio (based on American Community Survey data).
Instead, the disparity is because Los Angeles County, Orange County, and Ventura County all heavily restrict development beyond existing urban fringes. There are no such restrictions in Texas, which is why homes are more affordable.
Instead of solving this problem, Los Angeles is focusing on a “housing first” program that enriches non-profit and for-profit developers while it only scratches the surface of the homeless problem and does zero for housing affordability. As Joe Lonsdale of the Cicero Institute points out in a recent commentary, the entire West Coast is mired down by big-money programs that are ineffective at truly fixing the homeless problem. Lonsdale says recent legislation passed by the Georgia legislature will work better; I look forward to seeing if that is true.
In any case, this is just one more demonstration of the problem with tax-and-spend liberalism: the tax revenues are never as great as projected with the spending (on usually worthless projects) always ends up being more than projected. It’s true for light rail and it’s also true for homeless programs.
On other end really exposes the sort of narcissism rich have to literally hold off a purchase to screw homeless.
problem with tax-and-spend liberalism” . That’s narrow minded…
There’s 5 ways to run public fiscal policy.
1: Raise taxes, raise spending
(What democrats do)
2: Raise taxes, Cut Spending ( WHAT YOU SHOULD DO in good economy)
3: Raise taxes, raise spending ( what Reagan and later Clinton did)
4: Cut taxes, Raise spending (What Republicans do)
5: Leave taxes alone, cut Spending
To claim that the rich “literally hold off a purchase to screw homeless” is to think the worst of the rich. I believe the rich are simply minimizing expenses, as we all do. I also believe that if they were questioned about the effect on the homeless they would say that their funds would likely be wasted and the effect on the homeless is trivial. I think are probably correct.
In February, US Air Force confirmed that they needed two Sidewinder air-to-air missiles to take down the object flying above Lake Huron.
https://www.rollingstone.com/politics/politics-news/f16-missed-first-shot-lake-huron-ufo-1234679415/
At $400K a sidewinder costs more than a rolls royce cullinan SUV.. we now live in a society where its more expensive to kill someone than pamper them. Let that sink in.
I say this with heavy heart. San Francisco, Los Angeles will not be saved…..
I spoke about this before about how low iQ groups are incapable of sustaining a democracy… Newsom, AOC pander to voter base in that bracket. Voter base sells.
California is majority POC. My point is, as voter base they vote what they want as matter to be cattered to as public policy regardless if it’s wise idea….
Discontent in Africa, Central America and Muslim world is largely byproduct of their population that grows faster than their economy/GDP. While the US Army struggled to maintain order in the fairly modern city of Baghdad with its five million residents, the prospect of a military conflict in a megacity occupying these regions would be Apocalyptic. Since poor megacities operate near chaos, any disruption will result in catastrophe which is occurring now.
This chaos is man-made, among the plus billion people on Earth who are best described as Rudyard Kipling stated century ago as
“uncivilized.” They can’t read or write, and many do not even understand what causes pregnancy.
“On other end really exposes the sort of narcissism rich have to literally hold off a purchase to screw homeless.”
My point is that people who own $5 million homes in LA are probably stretched pretty thin while throwing money at the homeless industrial complex probably doesn’t do much for the homeless themselves.
Look at that giant front yard in the photo! Plenty of room for city planners to mandate a high rise apartment building.