May 28, 2024
Higher interest rates and a new tax on luxury home sales in Los Angeles are weighing on even the celebrity real estate agents who show off their million-dollar listings on TV.

By Caelyn Pender | Bloomberg

Higher interest rates and a new tax on luxury home sales in Los Angeles are weighing on even the celebrity real estate agents who show off their million-dollar listings on TV.

Mauricio Umansky, chief executive officer of the Agency and star of the Netflix series Buying Beverly Hills, said his company’s transaction volume, though better than average, is down about 25%. The housing market, he said, “is in a recession.”

Jason Oppenheim, president of the Oppenheim Group and star of two other Netflix programs, Selling Sunset and Selling the OC, also expects to sell fewer homes this year.

“This is when agents get defined — in difficult times,” he said.

The nation’s second-largest city, a perennial hot spot for real estate, is wrestling with higher interest rates that make homes less affordable and a new tax that went into effect in April. The city imposes a 4% levy on properties selling for over $5 million and 5.5% on those over $10 million, with the money going to fund affordable housing. Meanwhile, strikes by Hollywood writers and actors have shut down TV and film production, putting further pressure on the market.

In the first half of the year, sales of homes priced over $10 million in the greater Los Angeles area fell 44%, according to the brokerage firm Compass. Total volume declined 40% to $3.2 billion. The LA market still led the US in sales of homes above $10 million, with 160 properties trading in the first half of 2023.

Home sales to the merely rich have also tumbled. In Brentwood, where the median home price in June was $3.1 million, property sales fell 63%, according to broker Douglas Elliman. In Beverly Hills, which as a separate city isn’t subject to the LA mansion tax, the number of properties sold slumped 43%.

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Unlike Hollywood writers and actors, who have been on strike for better pay and benefits, reality stars like Umansky and Oppenheim can continue to work on their TV shows.

The downturn in the market may even make for better television.

“We highlight the struggles and the very real part of what it’s like to go through a transaction,” said Alexia Umansky, who is featured in her father Maurcio’s show. “It’s not always easy.”

In a difficult market – where a lack of supply means it is hard to find listings – the TV agents say their notoriety helps bring them business. The number of for-sale listings fell 29% from a year earlier, according to the California Association of Realtors.

“We are able to market someone’s property far more broadly and globally because of the show,” Oppenheim said.

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Not all high-end brokers think the TV exposure is worth the effort, however. The husband and wife team of Branden and Rayni Williams, who have bought and sold houses for Bruce Willis and Jennifer Lopez, said the clients they work with often prioritize privacy when selling homes, something not conducive to reality TV.

“We don’t have time to play pretend,” Branden said. “We’re too busy doing real deals.”

Aaron Kirman, who appeared on CNBC’s Listing Impossible for one season, said the amount of time it took to film transactions cost him millions of dollars, because he couldn’t fit potential clients into his schedule.

The Agency’s Umansky agrees that it takes extra time to promote a home on TV, from setting up the lighting to coordinating with crews. Where he might have one showing on a filming day, Umansky can show up to 10 houses on a day when he’s not on set.

“The reality is I have two jobs,” he said.

–With assistance from John Gittelsohn.

More stories like this are available on bloomberg.com

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