Turning Idle Equity into Opportunity

Los Angeles has long been a magnet for luxury homebuyers, high-net-worth individuals, and global investors. But since the introduction of Measure ULA in April 2023, the high-end property market in the city has shifted in unexpected ways. The measure imposes a 4% transfer tax on residential and commercial property sales above $5 million and 5.5% on sales exceeding $10 million. While the intention was to raise funds for affordable housing and homelessness prevention, the result has been a sharp decline in high-value transactions—estimated at around 40%.

For many property owners sitting on homes valued over $5 million, the reaction has been straightforward: hold off on selling. But with equity trapped in assets that aren’t producing income or advancing financial goals, the real question becomes—what now?

In neighboring Beverly Hills, where Measure ULA does not apply, luxury home activity has seen a notable uptick. Buyers and investors are turning their focus to locations where transaction costs aren’t compounded by additional taxes. But for those who already own within Los Angeles and are hesitant to trigger a costly transfer tax, this pause in the market offers an opportunity. Specifically, it’s a chance to reassess how equity can be used, not just stored.

The Cost of Doing Nothing

Equity is often considered a safety net or a symbol of long-term financial strength. And it certainly is. However, in a shifting market, idle equity can become more of a missed opportunity than a protective cushion. When money sits in a property without working for you, especially in an environment full of discounted assets and high-potential investments, you’re not just avoiding risk – you may be avoiding reward.

With luxury home values holding steady or adjusting downward in some areas, and distressed sellers looking for liquidity, this moment presents a rare alignment of buying power and availability. But it requires action and strategic thinking.

What Smart Investors Are Doing Instead

Across Los Angeles and beyond, savvy property owners are leveraging their equity through cash-out loans and equity lines to capitalize on opportunities they believe won’t be around for long. Here’s what that looks like in practice:

1. Acquiring Luxury Properties Off-Market
Not every deal is listed on the MLS. High-net-worth individuals are using their liquid capital to purchase properties quietly, often at steep discounts. Sellers needing a quick exit are willing to negotiate, and buyers with immediate funds are in the driver’s seat.

2. Flipping High-End Condos
Not every property needs a complete overhaul. In some areas, minimal cosmetic updates, fresh finishes, modern staging, and quality appliances, can significantly boost value. When purchased right, the return on investment can be swift and substantial.

3. Expanding Business Interests
Entrepreneurs and business owners are using their home equity to inject capital into new or growing ventures. Whether it’s opening another location, acquiring a competitor, or investing in new equipment or staff, these moves have long-term payoff.

4. Investing in Vacation Rentals
Short-term rental demand is still strong in travel-friendly locations. Properties in desert escapes, coastal communities, or wine country remain in demand. When managed well, these homes generate reliable income and have the potential for significant appreciation.

5. Partnering on Speculative Builds
In high-demand zip codes, developers are still moving forward with high-end builds. Equity can be used to take an ownership stake in these ventures, spreading risk while securing a share of future profits.

6. Converting Estates to Multi-Unit Rentals
Large single-family properties with the right zoning can be converted into multiple income-producing units. Whether it’s an ADU, a duplex conversion, or renting out part of the property, this approach turns quiet equity into a steady stream of cash flow.

7. Purchasing Discounted Notes on Trophy Properties
Some investors are acquiring the underlying debt on luxury properties rather than the properties themselves. When notes can be purchased at a discount, they create a low-risk, high-upside opportunity, particularly if the borrower refinances or sells.

8. Securing Prime Land
Zoning changes, infrastructure expansion, and general scarcity have made undeveloped land increasingly valuable. Those with capital are buying it now, often at below-market rates, with plans to develop or sell later at a premium.

9. Launching New Ventures
For some, equity is being turned into seed capital. Whether it’s a family business, a passion project, or a long-envisioned concept, these moves allow owners to act while market conditions are favorable.

A Shift in Strategy, Not a Loss

There’s no question that Measure ULA has made many luxury homeowners pause. But waiting doesn’t mean doing nothing. On the contrary, it’s an ideal moment to reevaluate your approach. Is your home a trophy asset, or can it become a financial springboard?

There are funding solutions available that don’t require you to sell, relocate, or give up control. A properly structured cash-out refinance or line of credit can give you access to hundreds of thousands, or even millions of dollars. And that capital can be redeployed in ways that match your goals, your risk tolerance, and your timeline.

Final Thoughts

The landscape in Los Angeles has changed, but that doesn’t mean opportunity has disappeared. In many ways, it has simply taken a new form. Equity that once felt untouchable is now being seen as a powerful resource by those willing to look at the market a little differently.

If you’re sitting on untapped equity in a luxury property, it may be time to ask: what could it be doing for you?

Now might be the perfect time to find out.