So, you’re looking at property in Los Angeles. Maybe you’re scrolling through Zillow at midnight, or maybe you’re a developer trying to make the math work on a 50-unit complex in Sawtelle. Honestly, the "vibes" of the LA market right now are... weird. We’ve moved past the 2021 fever dream where people were bidding $200k over asking just to live next to a noisy freeway. But we aren't in a crash either.
It’s a lumpy, complicated mess of local taxes, weird zoning, and a "mansion tax" that doesn't just hit mansions.
The Measure ULA Elephant in the Room
If you want to understand city of los angeles property in 2026, you have to start with Measure ULA. Everyone calls it the "mansion tax," but that's a bit of a lie. It’s actually a documentary transfer tax that hits any property sale over a certain price floor—residential, commercial, vacant land, you name it.
As of July 2025, the thresholds were adjusted for inflation. If you sell a property for more than $5,300,000 but less than $10,600,000, the city takes a 4% cut off the top. Go over $10.6 million? That jump is a 5.5% tax.
Think about that. It’s not a tax on your profit. It’s a tax on the total sale price.
Example: You sell an apartment building for $6 million. Even if you only made $100,000 in actual profit after paying off your loans, you owe the city $240,000 just for the privilege of selling.
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This has basically frozen the mid-tier commercial market. Owners are sitting on properties, terrified to sell because the tax wipes out their equity. However, the city has already collected over $1 billion from this tax as of early 2026. That money is flowing into affordable housing projects and tenant protections, which is great for some, but a nightmare for sellers. There is talk of a "Save Prop 13" act on the November 2026 ballot that might try to kill this tax, but for now, it’s the law of the land.
Why Prices Won't Just "Die"
You’d think with 6% mortgage rates and high taxes, prices would plummet. They haven't. The median home price in LA County is hovering around $900,000 to $945,000. In the city itself? It’s often higher, closer to $1 million.
Inventory is the culprit. It’s tight. Like, "trying to find a parking spot in Koreatown on a Friday night" tight.
While we’ve seen about a 10-15% bump in homes for sale compared to the 2023 lows, we are still way below historical norms. Most people bought or refinanced when rates were 3%. They aren't moving. Why would you trade a 3% mortgage for a 6.2% one unless you absolutely had to because of a new baby or a divorce?
Property Taxes: The 1% Rule (Sorta)
Most people know about Proposition 13. It’s the holy grail of California real estate. Basically, your property tax is capped at 1% of the assessed value at the time of purchase, plus a few voter-approved bonds.
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For the 2025-2026 fiscal year, the City of Los Angeles set its specific tax rate at roughly $0.012232 per $100 of assessed value on top of that base 1%.
But here is where it gets spicy: Proposition 19.
If you inherit a house from your parents, you don't just get their low tax bill anymore. Unless you move into that house as your primary residence within a year—and the home is worth less than a certain amount over the original tax base—the city is going to reassess it at current market value.
I’ve seen families forced to sell their childhood homes because they couldn't afford a property tax bill that jumped from $2,000 a year to $15,000 overnight. It’s brutal, and it’s something every LA buyer needs to plan for in their estate strategy.
The Micro-Market Split
Los Angeles isn't one market. It’s a hundred tiny ones.
- West Hollywood & Venice: Still aggressive. Tech money and "lifestyle" buyers keep these areas moving fast. You'll still see multiple offers here.
- The Valley (Sherman Oaks/Encino): More balanced. You actually have some leverage to ask for repairs. Shocking, I know.
- Downtown (DTLA): This is the rough spot. Office vacancies are high, and while some buildings are being converted to residential through "adaptive reuse," the values for Class C office space have tanked—down nearly 22% in some spots.
Zoning and the ADU Gold Mine
If you’re looking at city of los angeles property as an investment, you’re probably looking at ADUs (Accessory Dwelling Units). The city has been forced by the state to make building these "granny flats" much easier.
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You can basically turn a single-family home into a triplex now if you’re smart about it. One main house, one detached ADU, and one "Junior ADU" (like a garage conversion). For a lot of people, this is the only way to make the mortgage payment make sense. They live in the back and rent out the front, or vice versa.
Strategies for 2026
If you're actually going to buy right now, stop waiting for 3% rates. They aren't coming back. Fannie Mae and Freddie Mac are forecasting rates to stay in the high 5s or low 6s for most of 2026.
Negotiate the credits. Sellers are finally willing to play ball. Instead of asking for a lower price, ask for a "rate buydown" credit. You can often get the seller to pay $15,000 or $20,000 to lower your interest rate for the first two years. It helps your monthly cash flow way more than a small price cut does.
Watch the fire zones. This is huge. If you’re looking in the hills (Bel Air, Brentwood, parts of the Valley), getting insurance is a nightmare. Some major carriers have pulled out of California entirely. Before you remove your inspection contingency, get a quote for fire insurance. If you can only get the "California FAIR Plan," your monthly costs might be double what you expected.
Real Actions to Take Now
- Check the ULA Thresholds: If you’re selling, ensure your price is either comfortably below $5.3M or high enough above it to cover that 4% hit. Don't get stuck in the "death zone" just above the threshold.
- Verify Zoning: Use the ZIMAS (Zone Information and Map Access System) website for any LA property. It’ll tell you if you’re in a "Transit Oriented Communities" (TOC) zone, which allows for way more density than standard zoning.
- Audit the "Tax Base": If you’re buying from a long-term owner (someone who has owned for 30+ years), your new property tax bill will be massive compared to theirs. Don't look at what they paid; look at 1.2% of your purchase price.
- Insurance First: Get an insurance broker on the phone before you fall in love with a house in a high-risk brush area.