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April has opened and here in Los Angeles it marked not only the possible beginning of drier weather, but the definite beginning of the much discussed ULA Tax levy for luxury home sales. The new tax charges 4% for all home sales $5M or higher and 5.5% for all sales above $10M.
The hullabaloo leading up to the tax deadline pitted Buyers against Sellers in price negotiations throughout March as Sellers wanted to close before April 1st and Buyers knew they had the negotiation advantage ... and took it.
Where will it lead now? Whatever your belief about the rightness or wrongness of the new tax, I’ll tell you that the cost will be borne by Buyers from here on out. Sellers will account for this new selling expense and their bottom line for agreeing to any sale price will include that tax being paid – or they won’t sell.
Our market is ready for a Spring Boost. The number of sales this year compared to same time last year is down 40%. That’s a significant drop! Why? Numerous factors including historic low inventory, less buyer incentive as interest rates have risen, an increase in leased homes and homes for lease. My prediction guided by respected industry forecasters is for a healthy improvement by midyear. Many factors will balance out--- inflation appears to be slowing, there is less likely interest rate increase by the Fed next time and a general acceptance of current market stance as “the New Reality” for our marketplace.
For a lighter note and smile, I’m happy to announce that HGTV will be promoting our Team reality show, Kendra Sells Hollywood beginning April 21st primetime 9PM nationwide on its cable channel. HGTV will feature our Season 1 on three consecutive Friday nights as a build up to our Season 2 launch in May via streaming. I can’t reveal much here but just to say it’s a real look at how my Team works together to teach Kendra our professional business. Then in Season 2, the stakes are raised and Kendra begins real estate transactions that are unforgettable and very, very real. I hope you can tune in!
-Ernie
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