By Giulia Carbonaro, Newsweek

Los Angeles’ so-called “mansion tax,” which has imposed higher levies on properties valued over $5 million, has backfired against the city, according to a new study which found that it has slowed down new construction and shrunk sales.

A decline in new construction permits, which researchers link to the recently introduced levy targeting luxury homes, could exacerbate the city’s already significant shortage of affordable homes.

Even before the devastating fires in January last year destroyed more than 16,000 structures across Los Angeles, the county was already facing a deficit of nearly 500,000 affordable homes, according to California Housing Partnership’s 2021 Los Angeles County Housing Need report.