WSJ Your Money Briefing - A 'Mansion Tax' Complicated the Housing Crisis. Could a Federal Bill Fix It?

Episode Date: June 24, 2026

A Los Angeles tax meant to fund affordable housing offers a cautionary tale about the potential unintended consequences of well-intended policies. WSJ reporters Rebecca Picciotto and Paul Kiernan join What's News host Alex Ossola to explain what that lesson could mean for a bipartisan federal housing bill that President Trump is expected to sign. Listen to all episodes in our series on ideas for fixing the housing crisis. Sign up for the WSJ's free Markets A.M. newsletter. Additional reading: Los Angeles Tried to Tax Mansions. Apartment Construction Tanked.  Newly Passed Housing Bill Throws Lifeline to Home Builders  A Bill Aimed at Creating Homes Is Leaving Plots Empty Instead Senate Passes Housing Bill, Bringing an Investor Ban Closer These Developers Stand to Win in Trump’s Housing-Investor Crackdown  Learn more about your ad choices. Visit megaphone.fm/adchoices

Searching for a home, the real commute tool from Realtor.com, lets you find homes right where you need to be. Find a home 10 minutes from work, 15 from school, and 20 from grandmas. With over half a million new listings every month, you're just minutes from finding your perfect home on Realtor.com. Trust the number one site Real Estate Professionals Trust. Search now on Realtor.com. Based on average new for sale and rental listings July 24 through June 2025.

Number one trusted based on August 2025 proprietary survey among real estate professionals. Hi listeners. Imani Maui is here. Your money briefing is on hiatus, but our special coverage isn't. Today we return to our series exploring America's biggest financial hurdle, housing. There's a bipartisan bill that aims to ease the housing crisis. We'll dive into that, plus one city's attempt to make housing more affordable, and the unintended consequences that followed. So can this new bill succeed where other housing policies have fallen short? What's news host Alex Osala breaks that down after the break. Visit BetMGM Casino and check out the newest exclusive. The Price is Right Fortune Pick.

BetMDM and Game Sense remind you to play responsibly. 19 plus to wager. Ontario only. Please play responsibly. If you have questions or concerns about your gambling or someone close to you, please contact connects Ontario at 1-866-531-2,600 to speak to an advisor. Free of charge. BetMGM operates pursuant to an operating agreement.

with Eye Gaming, Ontario. In 2022, Los Angeles voters approved a new tax on sales of the city's most expensive properties. Supporters called it the mansion tax. Our city is in the midst of an affordable housing crisis. United to house L.A. measure is a tiny tax on Megamansans. To fund the work L.A. needs to do right now to house our neighbors. It passed with about 58% of the vote. And some homeowners who would have had to pay the tax rushed to try to sell their properties

before it went into effect on April 1st, 2023. Says some sellers have been offering cars and million dollar commissions as an incentive to sell properties as soon as possible. Is offering a new Aston Martin, McLaren, or Bentley. If you come up and pay the full asking price of 16.5 million, by the way, you've got to close before Saturday. With millions of dollars at stake and the clock ticking down for sellers of homes like these,

this year's April Fool's day is no joke. Journal Economics reporter Paul Kiernan says the tax was created to try to help renters and build more affordable housing. The pitch was to basically relieve a spiraling homelessness crisis and housing shortage. In 2022, when voters approved this thing, there were encampments popping up everywhere. And so a group of nonprofits that specialize in building affordable housing, formed a coalition to impose this tax, estimates at the time anticipated that the tax would bring in up to a billion dollars a year. But that's not what happened.

See, the issue is that the tax isn't just for mansions. It applies to pretty much any real estate sale above $5.3 million. And that includes apartment complexes. And developers say this tax, which starts at 4%, means it doesn't make financial sense for them to take on building more housing. And so what we've seen is that a lot of developers have just gone pencils down on multifamily housing, really any construction in L.A. And many say that it's made the city's housing shortage even worse. Building permits in 2025 were down 46% from 2022, which was the year before the tax took effect. And they have the lowest level since 2013.

And a lot of people in real estate basically think that, you know, this is going to cause rents to go up eventually because LA is just not building as much housing as it needs. Three years since the law went into effect, many critics, even some former supporters, say the tax has worsened the housing crunch. They're busy trying to change or overturn the tax. But its backers say there are other issues slowing down housing construction, like high interest rates. and that it's too soon to tell whether or not the tax could work. Paul says there's a lesson here for anyone who's looking to fix the housing crisis. I do not think that the proponents of L.A.'s mansion tax wanted to cause multifamily housing construction to dry up. This was a measure that tapped into the good intentions of L.A. voters to relieve homelessness and produce more affordable housing.

but it is a reminder that policies sometimes have unintended consequences. And in the case of LA, those consequences can be directly counter to the original goal. I'm Alex O'Sullough. And today we're talking about housing policy and its consequences. The Los Angeles tax is already in place. But in Washington, after months of negotiations, the House and Senate this week passed a bill that seeks to address the housing crisis on a national level. It now goes to President Trump, who is exonerated.

expected to sign it into law in the coming days. The bipartisan effort has become one of the White House's signature initiatives, and there was a big push to get a deal done before the midterm elections. To understand the bill and what it could mean for Americans, I'm joined by Rebecca Pachodo, who covers the residential real estate market for the journal. Rebecca, what is in this final version of the bill? So this final bill has more than 50 provisions aimed at making it easier to build more housing and one provision aimed at trying to keep private equity out of the housing market.

It's been nearly a year of back and forth, but what the two chambers have settled on has all of the same bills that the House passed in May, but it adds back some of the earlier Senate provisions that the House had removed. So, for example, this Billed Now Act, which is a provision that essentially ties federal grant funding that a city gets to the amount of housing

they produce. So the more housing a city produces, the more grant funding they could be eligible for. This is one of the kind of carrot and stick approaches that the two chambers settled on to try to incentivize local governments to build more. Let's go back to the beginning with these bills. Who introduced the bill? What was the intention behind it? The first version of this bill came out in August 2025. It was introduced by Senators Elizabeth Warren. and Tim Scott, a Democrat and a Republican. At that time, it really was just a pretty uncontroversial package of a bunch of small housing bills that everyone largely agreed was a step in the right direction. No one bill in the package was going to do enough to move the needle. But together,

it was seen as Congress's largest move on housing in decades. And it had this massive bipartisan support. It included everything from, you know, speeding up permitting processes, cutting red around environmental reviews, making it easier to build manufactured housing, encouraging local municipalities to ease their zoning laws, a bunch of small tweaks that in tandem are seen as crucial to increase housing supply. If you ask real estate leaders, the federal government has a very limited ability to actually enact real change. What housing gets built where is often determined on the local level, but the sort of symbol that the federal government was moving towards encouraging more housing supply, that was seen as enough to have the momentum and support to

pass it. Okay, so these two lawmakers introduce it. It's bipartisan. Then what happens? When Trump at the beginning of this year announced his executive order to ban Wall Street Housing investors, he demanded that Congress codify that ban into law, and the White House saw the Senate's Road to Housing Bill as a very convenient vehicle to get that done. And now this man has created this back and forth that I don't think lawmakers had initially intended when they first

introduced the bill. So for those of us who haven't been following the bill up to this point, what is the investor ban and why is this something that President Trump cares about? Basically, Trump wants to forbid large institutional investors from buying up single-family homes and essentially turning them into investments, renting them out, et cetera. His theory is that there are these large Wall Street companies that are basically stealing the housing supply from American families who otherwise would have been able to pursue the American dream of home ownership.

So the idea is to eliminate these behemoth investors from competing with individual investors who can't pay all cash or offer the higher bids that these firms can. It's been controversial because there's this general sense that this is a largely political move, and economists will maintain that the amount of housing that Wall Street investors actually own is relatively low single digits across the country that is felt differently in different places. You know, Phoenix, Atlanta, you can have investor-owned housing stock up to like 20 percent. So this polled really well, but investors are often kind of a

important financing avenue for home builders to offload surplus housing stock. It allows them to build more homes. The primary worry of the real estate industry was that this investor ban would send a signal to the lenders and financing partners that they typically go to, that the government is trying to suppress the number of single-family rentals that exist in America. So the real estate industry has been lobbying around this bill. They've had concerns about it. Where does the industry stand on it now? The bill is generally something that the real estate industry likes. You know, it sends a message to local leaders that you want to streamline regulations and make it easier to build. So the real estate industry broadly sees this bill as a victory. The investor ban piece is

sort of a more sour pill to swallow, but at this point, I think they've negotiated down to a point where they feel okay. Yeah, there was also a provision at one point aimed at what's called build to rent developments? What happened with that? Build to rent is sort of a small but growing segment of the rental market where developers create these communities of single family homes built for the sole purpose of renting them out. You can think of them as like horizontal apartment buildings in some ways. And these developers say that their properties allow renters to live in nice neighborhoods that they wouldn't otherwise have been able to afford to own in.

So the Senate introduced this provision that after you build your community of rentals, homes. You can hold it for seven years and then you need to sell them so that now you're increasing the housing supply for American families. There was a lot of pushback from the rental housing industry. Billions of dollars of investment had been frozen, investment that would have gone to building new projects. And that translated to tens of thousands of housing units on pause, even just on the threat that this might come true. So house lawmakers in their most recent version of the housing bill last month, stripped out that seven-year sale provision, and the Senate left that provision out securing the protection for the bill to rent industry.

At the start of this episode, we discussed the L.A. Mansion Tax and some of the unintended consequences it brought with it. Can federal lawmakers learn anything from how that played out in L.A.? The common thread between this mansion tax and this federal bill is that housing investors can be scared off by just one seemingly simple change in housing policy, even just the threat of a change, it can put entire projects on pause. There are a lot of things that a politician or elected official might think makes a ton of sense and then has all of these kind of unintended ripple effects for the industry. That was Wall Street Journal reporter Rebecca Pichodo.

Thanks, Rebecca. Thanks for having me. And that's it for this special. special episode of Your Money Briefing. This episode was produced by Danny Lewis with sound design by Michael LaValle. Tali Arbell is our supervising producer. And I'm Alex Osala. Tune in tomorrow for another episode in the series where we get into what happens when people decide that home ownership is a part of the American dream that's no longer for them. We'll be talking about the renter revolution.