Why LA's richest are ditching their mansions — and where they're moving to (2024)

Gus Lira, a managing partner at a private jet charter company, loved where he lived in Malibu. His condo overlooked the ocean right off the Pacific Coast Highway, near the Getty Villa.

But he knew he needed to get out of California.

"For me, really the main reason, and for many of the people that I know, is just taxes," Lira told Business Insider, adding that many of his friends had also recently left the state. "It's just crazy. California is making it very difficult for everybody."

More ultrawealthy California residents are scouring the market for good deals, prioritizing tennis courts and guest houses over an exclusive ZIP code.

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In particular, the luxury market in Los Angeles is stalling to a "chill" with high interest rates, the fallout of the Hollywood strikes, and the rising cost of insurance in the state slowing home sales. For some wealthy residents of LA, the final straw in their desire to leave was the "mansion tax," which took effect in April 2023 and applies a 4% tax to sellers on homes above $5 million and a 5.5% tax on homes above $10 million.

When friends of Lira's from Orange County who had recently bought a place in Las Vegas recommended he check out Nevada, he was skeptical of moving to the desert. But after visiting Summerlin, a Vegas community near Red Rock Canyon, he bought a place within days — a $1.9 million four-bedroom home with a pool.

Lira said a similar place in his neighborhood in Malibu, on the Pacific Palisades side, would probably go for $8 million.

He still has his Malibu home, and he said he planned to spend about five months of the year there.

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"But I'm not a California resident anymore," he said. "Couldn't afford it anymore. You can't get ahead when you get $100 and they take $60."

Cami Lincowski, a Las Vegas real-estate agent who helped Lira find his home, said she'd seen an uptick in clients coming to Vegas from California "because they see how much bang for your buck goes here."

LA topped Redfin's list of US metropolitan areas that homeowners are looking to leave the most, based on its user data of home searches. The data suggested Golden State residents were most likely to dream of moving to Las Vegas and Seattle, and many did seemingly take the plunge as the state lost 350,000 residents between 2021 and 2023, according to the US Census.

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Lower taxes and more space have also been luring Californians to Florida, Texas, and Tennessee, among others.

But the exodus isn't just happening among those who struggle to make ends meet. The personal-finance site SmartAsset found that wealthier Americans making more than $200,000 a year were moving out of high-cost states such as New York and California.

Jennifer Janzen, a San Diego real-estate agent, said she'd recently had LA clients head south to trade up in style. One client traded her Hollywood Hills home for a five-bedroom, $7 million home in Rancho Santa Fe, a wealthy enclave about 30 minutes north of downtown San Diego, where homes sold last year for a median of $6 million, according to Redfin. The client's house came with a guest house and was on a golf course. Janzen said the client wanted an "amenity-filled" lifestyle and a "peaceful" place for her parents to live.

Another client of Janzen's was a young family who grew tired of the city life in LA. They settled on a $6.5 million, 10,000-square-foot spread in Rancho Santa Fe that came with its own tennis court and soccer field.

"People coming from LA want their resort at home, and towns like Rancho Santa Fe have these giant parcels of land," Janzen, who's with Sotheby's, told BI.

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Wealthy homeowners say the mansion tax has just piled on

Another factor has been the mansion tax, which the luxury-real-estate industry has sounded the alarm on since LA voters approved the measure in November 2022 with 57% in support.

Lira called the tax the "coup de grâce," or final blow, for him and his high-earning friends to leave California.

The mansion tax has also probably contributed to the low inventory of luxury homes in LA, with potential sellers worried about how much they may have to pay in taxes. Between April 1, the day the tax was implemented, and June 1, only three homes above $5 million sold in LA, Vanity Fair reported. Nearly 130 homes in the same price range were sold in March alone, right before the tax went into effect, the report said.

Jade Mills, a real-estate agent in LA, told BI she had a client who was looking to sell their $20 million home but backed out from the process altogether when they realized they'd have to pay the 5% tax — for them that amounted to $1 million.

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Some of the wealthiest Californians are deciding to keep their LA homes but rent them out as luxury pads rather than accept lackluster prices on a sluggish market.

Rob Desantis, a homeowner, listed his seven-bedroom, 12-bathroom Manhattan Beach home for $150,000 a month.

"This is a hedge," Desantis, an investor, told Bloomberg, "I believe leasing it out will highlight the value of the property in a much better way."

The stalemate has even reached reality television, as the LA agents of the popular Netflix series Selling Sunset opened their latest season complaining about the slowdown.

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"This is going to be a nightmare for us," the agent Mary Fitzgerald said on the show. "We're just screwed."

Why LA's richest are ditching their mansions — and where they're moving to (2024)

FAQs

Why LA's richest are ditching their mansions — and where they're moving to? ›

One-percenters are ditching their Los Angeles mansions for homes in cheaper areas. Many wealthy buyers have been driven out by the "mansion tax" in LA, among other tax-related issues.

Where are the LA rich moving to? ›

The study found that those people chose to move to Florida, Texas and New Jersey the most, with the Sunshine State taking the top spot.

What is the mansion tax in Los Angeles? ›

The tax brings a 4% charge to all property sales above $5 million and a 5.5% charge to all sales above $10 million in L.A. One year ago, Los Angeles' “mansion tax” took effect.

Why are houses so expensive in Los Angeles? ›

A lack of supply continues to drive high prices. New listings are up by just 2% compared to 2023, and buyers have paid over the asking amount in 49% of all home sales in L.A., Zillow says. This resulted in many of the listings being snatched up quickly.

Why so many billionaires live in California? ›

Tax Role. California's sunny climate, first-class universities and access to Silicon Valley and Hollywood has long made it a haven for wealthy people who play an outsized role in the state's economic fortunes. Its progressive tax system relies on the top 1% of earners for roughly 50% of personal income tax revenue.

Why are wealthy Californians leaving? ›

The accelerating exodus from California in recent years, of both companies and people, has been well documented. The pandemic-induced rise in remote work, inflated housing prices and changing social conditions have spurred more Californians to pull up stakes.

Where do the super rich live in LA? ›

Most would agree that the neighborhood in Los Angeles with the most expensive homes is considered to be Beverly Hills. It's renowned worldwide for the luxurious properties of the rich and famous Hollywood set. But according to our clients prices in neighborhoods such as Bel Air and Holmby Hills are not far behind.

What is the mansion tax proposal in California? ›

Los Angeles voters famously passed the “mansion tax” by ballot initiative in 2022. The measure increased transaction taxes on transfers of real estate in the City of Los Angeles from 0.56% of the price of the property, less any transferred debt, to up to 6.06% of the price, regardless of debt transfer.

What is the tax on a house over 5 million in California? ›

Well, it's a tax imposed in California on property sales above certain thresholds. Specifically, if your property sale exceeds $5 million, you'll be subject to a 4% tax. If it surpasses $10 million, the tax rate increases to 5.5%.

What is the new house tax in Los Angeles? ›

Effective for transactions closing after June 30, 2024, the new thresholds for ULA will be $5,150,000 and $10,300,000. Transactions above $5,150,000 but under $10,300,000 will be assessed a 4% tax and transactions $10,300,000 and up will be assessed a 5.5% tax.

How do people in LA afford houses? ›

In 2021, anyone looking to buy a home in the city of Angels needed to make $157,000 a year. However, now, that same person would need to make $64,000 more, or $221,000, to buy a median-priced home. "There are basically no affordable neighborhoods in Los Angeles anymore — there used to be," said Fairweather.

How much is a decent house in LA? ›

Los Angeles, CA housing market

In April 2024, the median listing home price in Los Angeles, CA was $1.2M, trending up 2.5% year-over-year. The median listing home price per square foot was $718. The median home sold price was $1M.

Are home prices in LA going down? ›

The median price of an existing single-family home in Los Angeles County in December was $853,340, down from $897,990 in November but higher than the $799,670 in December 2022.

Who is the richest person living in California? ›

Richest Person in Each State 2024
NameStateEst. Worth 2024 ($B)
Mark ZuckerbergCalifornia$177.0
Philip AnschutzColorado$15.3
Steve CohenConnecticut$19.8
Elizabeth SnyderDelaware$0.8
6 more rows
May 3, 2024

What city in California has the most millionaires? ›

  • 1) Atherton. Atherton, which is located in the center of Silicon Valley, is a shining example of luxury and wealth. ...
  • 3) Rolling Hills. Rolling Hills is a wealthy and scenic haven of wealth perched atop the picturesque Palos Verdes Peninsula in Los Angeles County. ...
  • 5) Woodside. ...
  • 7) Los Altos Hills.
May 22, 2024

Where billionaires prefer to live? ›

Hurun Research Institute. In 2024, Hurun Research Institute listed New York City with the most billionaires at 119 people, followed by London with 97 billionaires, and Mumbai in third place with 92 billionaires.

Where are rich Californians moving to? ›

Several hotspots for fleeing Californians are Texas, Florida, Arizona, Tennessee and Nevada. What ties these states together? They are all very tax friendly. Texas and Florida experienced the highest population growth in 2023, according to Census data, with gains of 473,453 people and 365,205 people, respectively.

Where is everyone from LA moving to? ›

Texas is the top state that Californians are moving to.

All of the individuals leaving California had to relocate somewhere, and Texas was the most popular choice, with 102,442 people moving there, according to U.S. Census data.

Where are rich Americans moving to? ›

It's possible to track the moves of high earners in particular. A July 2023 study by personal-finance site SmartAsset using tax-filing data from between 2020 and 2021 found that people making at least $200,000 a year are moving to states including Florida, Texas, North Carolina, and Tennessee.

Where do rich people hang out in LA? ›

Runyon Canyon

Contrary to popular belief, stars aren't always hanging out at old school celebrity hangouts like The Polo Lounge and The Ivy. If you want to catch a star in public, hiking Runyon Canyon (92000 N. Fuller Ave., Los Angeles 90046) is one of the best places in LA for encountering the rich and famous.

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