Sthanlee B. Mirador/Sipa USA via AP Images
Celebrity real estate brokers Brett Oppenheim and Jason Oppenheim, right, appear on the red carpet at the People’s Choice Awards, February 18, 2024, in Santa Monica, California.
On the finale of the most recent season of Selling Sunset, celebrity real estate agent Jason Oppenheim is having trouble finding a buyer for a $29.9 million listing in Manhattan Beach.
“We need to reduce the price, plain and simple,” insists his agent Chelsea Lazkani, leaning back in her Aeron chair in a strapless black-and-white gown that might appear incongruously formal for a morning meeting at a real estate brokerage if everyone on Selling Sunset did not habitually dress like they were walking the red carpet before a high-second-tier awards ceremony.
But Oppenheim isn’t so sure. “No one in the history of Manhattan Beach has ever, ever sold a house for more than $25 million, ever,” he points out. It’s not logically clear how this bolsters the notion that $30 million is a more appropriate price, but the vibes seem to track. “I know Manhattan Beach, I know I’m right and in a couple of months, they’ll be reducing the price,” Lazkani tells the camera later; and indeed, the Oppenheim Agency reduced the price to $25 million before taking the property off the market entirely last summer.
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A couple of weeks ago, Oppenheim woke up to blazing fires, putting thousands of displaced, high-net-worth families in West L.A. in search of multimillion-dollar listings, and fast. Once again, Oppenheim elected to do the counterintuitive thing, and rebrand himself as a populist hero to seize the moment.
“There are price gouging laws in California, they’re just being ignored right now,” he told the BBC, in an interview that quickly went viral and won him the nickname “Comrade Oppenheim.” Sharing the story of a client who had just offered $20,000 a month (and a six-month deposit!) for a rental property listed at $13,000, only to have the landlord turn around and demand $23,000, he reminded viewers that California prohibits raising prices by more than 10 percent in the immediate aftermath of a natural disaster. “This isn’t the time to be taking advantage of situations,” he added.
But as the ever-growing crowdsourced spreadsheet of price hikes soaring into the triple digits compiled by a local tenants’ rights advocate suggests, the Los Angeles real estate world is having a hard time restraining itself from the urge to capitalize on chaos. For five years now, the industry has been upended, first by Airbnb restrictions and short-term rental crackdowns; then eviction moratoriums that lasted as long as three years and other enhanced tenant protections passed during the pandemic; then by skyrocketing insurance premiums and eroding commissions; then, finally, the ungodly interest rates.
Rising rental listings can have spillover effects in these types of environments, inflating other rental prices down the food chain.
For everyone from landlords to brokers to builders to luxury property staging consultants, the fires represent an unprecedented opportunity to demand ungodly sums for premium properties—$75,000 a month for 1,500 square feet in Malibu, anyone?—and lobby away their most loathed regulations, from California Environmental Quality Act rules governing new construction projects to the $3 million ceiling on state-subsidized homeowners’ insurance.
For Oppenheim personally, the so-called “mansion tax” is first on the chopping block. Though he hasn’t spoken about it during his Robin Hood–style recent television appearances, Oppenheim led 50 high-powered brokers in a letter sent to city and state officials this week, obtained by news outlet Mansion Global, asking for the city to temporarily waive the tax, specifically for developers purchasing damaged homes.
In 2022, voters passed Measure ULA, otherwise known as the mansion tax. It levies a 4 percent tax on commercial and residential real estate sales valued above $5 million, and a 5.5 percent tax on sales above $10 million. The revenues from the tax are earmarked for new services for the homeless and affordable-housing projects.
Ever since the measure passed, developers have been dragging the law through court. In 2023, a court ruling upheld Measure ULA, forcing brokers to turn to other means to reverse the law. The fires present a new opportunity to fast-track literal fire sales of burned-out homes that can be quickly rebuilt thanks to streamlined permitting rules and turned back out at a hefty profit. By creating an exemption to Measure ULA, this get-rich-quick scheme would come directly at the expense of the homeless and those struggling to get by in a hyper-powered, fire-fueled rental market.
THE BROKERS WHO SIGNED ON TO THE LETTER present themselves as ostensibly representing homeowner interests. The letter simultaneously calls for the California state home insurance program, California FAIR Plan, to raise its limit on payouts to $6 million, up from the current threshold at $3 million. FAIR Plan is a backup option for homes left uncovered by private insurers, who have fled the state in droves because of wildfires and other extreme weather conditions.
In that same vein, the brokers argue that the mansion tax suspension would bring relief to fire victims who want to sell what remains of their valuable property without facing an onerous tax on top of it. “I would love to say everyone’s going to be able to rebuild,” Oppenheim said in a Wednesday appearance on CNBC. “But many of the people I’ve spoken to, they’re dentists, or nurses, or lawyers, people who have no business and no skill set to do a rebuild process.”
What’s left unspoken is that brokers have long fought against the tax because it hurts their bottom line by potentially dissuading some owners from selling, and fewer sales means fewer commissions.
There’s been some criticism that the mansion tax isn’t hitting the intended target. Just before it took effect, there was a major sell-off of highly valued residential properties timed to avoid the tax. One consequence is that a huge portion of the revenues, just over half, is coming from sales of multifamily housing, apartment buildings, and commercial real estate.
Dan Tenenbaum, an affordable-housing developer who served as Los Angeles’s housing authority commissioner until 2023, lived in the Palisades until the fires and decided to move across town even though his apartment was theoretically habitable, because “the entire area is just a war zone.” If nothing else, he says, mansion tax waivers should be carved out for commercial real estate projects in areas that have been eradicated by the fires. Notably, however, that’s not the specific carve-out that the brokers are asking for.
No one, it’s worth noting, has lobbied to overturn the state’s price-gouging law. But that’s partly because the current rule triggered by the fires is set to expire next month. Gov. Gavin Newsom did just issue an executive order extending the price-gouging ban into March. The penalty for price-gouging is capped at $10,000 per infraction, though Los Angeles City Councilmember Traci Park, who represents the Palisades, has proposed raising the penalty to $30,000, given the potential spoils of renting out a house for $70,000 a month.
The kind of upscale clientele who can afford such astronomical rent certainly aren’t in an economically vulnerable population. But rising rental listings can have spillover effects in these types of environments, inflating other rental prices down the food chain, too.
The two brokerages that led the mansion tax exemption letter—The Oppenheim Group and The Agency—both represent clients with several properties on the spreadsheet that have dramatically hiked rental listings. Brokers play a role working with landlords to set rents, and often are naturally incentivized to maximize the potential price point since they typically get a portion through commission.
One listing by The Agency hiked rent from $50,000 before the fires to $59,000 after, an 18 percent increase. Brokers working for the Oppenheim Group have three listings that have hiked rents, despite Jason Oppenheim berating landlords in the local press for illegal practices.
Since the price-gouging spreadsheet went live earlier this week, it has included over 1,200 listings, with increases as high as 124 percent. The tenants’ group has also reported over 700 cases to local authorities for violations of the price-gouging law. The attorney general of California, Rob Bonta, sent out a consumer alert, putting landlords on notice. Reportedly, a number of landlord trade groups and Airbnb have also warned their rental owners about the rules.
If nothing else, Comrade Oppenheim’s crusade has driven luxury rent-gouging underground: Virtually all of the more than 1,000 listings compiled on the spreadsheet had been removed or reduced when the Prospect clicked on them.
But Tenenbaum senses a general vibe shift on the horizon for the industry. During a recent appearance on the podcast No Vacancy, he reflected on his long career navigating developer-civic relations as an affordable-housing developer, housing commissioner, and lobbyist. “The way I would summarize the last maybe 20 years [is] that it used to be they would pass legislation that would make the landlord community unhappy and the tenant community unhappy, so everyone’s unhappy and as a politician you can probably pat yourself on the back because that’s the best you’re gonna get.” But “ever since COVID,” he continued, “the balance is no longer there … it has been bashing landlords, the private market is now alienated, and the developer community is now alienated.”
Reached on Thursday while he was wiring a deposit on a new apartment in Sawtelle, Tenenbaum agreed the balance had been upended, but said it was too early to predict what the fallout would look like, while most of the displaced are still waiting on hold with their insurance companies.
But in the meantime, the bros of the real estate market want to put their thumb on the scale to ensure the rebuild of Los Angeles after the wildfires works in their favor.
