Rising Transfer Taxes

California has more than 20% of the nation's entire housing market when measured by value, according to Zillow. Given the high value of the state's real estate portfolio, it is no surprise that California has regularly been a forerunner in emerging tax policies. Recently, many California cities, including flagship markets in the Bay Area and Southern California, have increased their real property transfer tax rates.

Background

Cities are motivated by two main policy concerns when raising transfer tax rates: (1) financial interests (e.g., cities want to raise money to finance affordable housing and homelessness prevention programs) and (2) anti-gentrification concerns (e.g., where cities want to halt community displacement by raising tax rates on new real estate investments). These tax increases will materially impact real estate developers, investors, lenders and other industry stakeholders in these cities. Given California's trendsetter status, these new tax