Luxury home sales lose their shine in the Golden State

High-priced homes are at a near-record low in sales, as consumers with deep pockets are concerned about the economy, higher mortgage rates and a rollercoaster-like ride on Wall Street.

Nationally, luxury home sales – considered the top 5%-priced homes – plummeted 45% for a three-month period that ended in January, according to Redfin. California accounted for three of the four hardest-hit luxury markets, with sales tumbling at least 59% in Anaheim, Riverside and San Jose.

It’s a big turnaround from the boom in luxury home sales during the first two years of the COVID pandemic, when cheap money – mortgage rates were in the 3% range – fueled the housing market. But the competition for high-end homes is definitely over.

Despite the dramatic decline in sales, luxury home prices continue to increase, primarily because of a critical shortage of high-end properties. 

Luxury home prices are up 9% nationwide, and only four markets – Oakland, Sacramento. San Francisco and San Jose – reported declines. The Bay Area has been reeling from large-scale layoffs in recent months at many companies, from Facebook parent Meta Platforms to Google. 

In comparison. luxury home prices in Southern California are up about 10% from a year ago (see table).

However, there are signs that even luxury market prices will slide as sales continue to tumble.  


Many buyers, regardless of their price range, are holding off on buying homes because of higher mortgage rates – about 3 percentage points higher than 18 months ago – and the hope that prices drop. California’s median home price has dropped 18% from the peak reached in May 2022, according to the California Association of Realtors.

But high-end buyers are also more likely to get approved for mortgages since they often boast better credit scores, larger down payments and still-solid investment portfolios, despite the rough ride on Wall Street.

“The silver lining for the luxury buyers who are still in the market is that competition is sparse and jumbo loans now often have lower mortgage rates than other loan types,” says Chen Zhao, economics research lead for Redfin. “Wealthy house hunters are also frequently offered additional rate discounts from their banks as a perk for storing substantial funds there.”

Just the latest evidence that the rich really aren’t like the rest of us. Well, except in one area when it comes to mortgages: They should “shop around for the best mortgage rate possible,” Zhao says.

For wealthy home shoppers, it may be easier to get a jumbo loan than find a jumbo house.

Feature photo: A multimillion-dollar home in Santa Monica. SHUTTERSTOCK

California luxury home sales for three months ending Jan. 31, 2023

MetroSales vs. a year agoMedian luxury home sales pricePrice vs. a year ago
Anaheim-59.3%$3.80 million +9.2%
Los Angeles-55.5%$3.62 million+10.6%
Oakland-55.5%$2.58 million-3.2%
Riverside-59.8%$1.40 million+11.6%
Sacramento-55.2%$1.40 million -1.6%
San Diego-58.5%$3.19 million+12.0%
San Francisco-54.9%$4.70 million-4.6%
San Jose-59.0%$4.01 million-10.7%

Source: Redfin

Homes along the Venice Beach canals in Los Angeles. ADOBE STOCK

LA’s mansion tax arrives – and huge tax bills will follow

Speaking of luxury homes and money, the city of Los Angeles’ voter-approved ULA tax went into effect April 1.

The so-called “mansion tax” affects homes sold for more than $5 million and will generate much-needed funds for affordable housing to fight homelessness in the nation’s second-largest city.

Homeowners with high-priced homes and their real estate agents raced against (and round) the clock in March in order to avoid the hefty mansion tax. 

Some were clever and offered buyers one-of-a-kind incentives. You know, buy the house before April 1 and keep the high-priced artwork or the limited-edition sportscar in the seven-car garage. Rich people are clever when it comes to keeping money.

But those bargain-priced deals are gone, and the tax collector will be knocking on the door demanding money from sellers. A lot more money. 


Under the mansion tax, homes sold for more than $5 million will have to pay the city 4% of the sales price. For homes $10 million or more, sellers will have to pay a 5.5% tax. Ouch.

A couple of things worth noting. The mansion tax is in addition to the transfer tax and must be paid even if the home is sold for less than the original purchase price. Double ouch.

Fortunately, the city of Los Angeles Office of Finance has established an easy-to-use online tool that lets sellers calculate what they will owe. Because, you know, they won’t be able to afford an accountant, a calculator or a pencil with the mansion tax.


For example, a home that is sold for $10 million will have a $595,000 bill from the ULA and the property transfer tax, according to the Office of Finance. A $5.1 million house will have a $227,000 tax.

Owners looking to sell in the $5 million range will likely just lower their price below the tax threshold. But for homeowners with luxury estates – think of those in Beverly Hills or the Hollywood Hills – the mansion tax will be a hefty price.

While the mansion tax may cut home prices in the $5 million range and the interest of potential buyers, the tax hike will likely encourage wealthy buyers to look at other nearby cities in Los Angeles County, like those in the Santa Clarita Valley or the South Coast. Or they may just be ready to hit the road for Nevada, Texas or Florida.

The percentage of single women who owned homes declined in 2022, ending several years of gains. Only a fraction of single women can afford to buy in California. ADOBE STOCK

Single-women homebuyers lose ground in the homeownership race

Buying a home became more of a challenge for single women in 2022, ending five years of gains that helped narrow the gap between single men homeowners.

Single women homeownership declined to 24.5% in 2022, compared to the record 28.6% in 2021, according to a Zillow report. Fewer than one in five single women (19.4%) owned a home in 2016, considered a modern-day record low.

The dramatic one-year drop is largely attributed to the COVID pandemic, when many women – single and married – either cut their hours at work or left the workforce altogether to help children with distance learning or care for family members, or both.

And a quick recovery for single women will be tough, especially with the current home prices – though they have declined 18% from the peak in May 2022 – and 6%-plus mortgage rates.


In California, high home prices make buying a home a challenge for many households, but the hill is much steeper for single women, according to Zillow.

Fewer than 2% of single women – yes, 2 of every 100 – could afford to buy the current homes for sale in Riverside County. Sadly, that was the most affordable metro in California, with less than 0.3% affordability rates for single women in San Francisco, Los Angeles, San Diego and Sacramento.

However, Sacramento is the only of the five markets in the state in the report where single women had the same buying power as men. Sacramento boasts the largest government workforce in the state, and second in the nation only to Washington, D.C. The Sacramento region – once one of the most affordable in the state – experienced double-digit gains during the past three years.

The best markets for single women nationwide are Pittsburgh, St. Louis and Detroit.