‘Selling Sunset’ patriarch navigating a real estate ‘death knell’

For brokers and agents at the Oppenheim Group, the fickle and seemingly slowing real estate market hasn’t stalled their overall success – but that doesn’t come without challenges.

Over the past year, the patriarch and lead of Netflix’s “Selling Sunset” and “Selling the OC” series, Jason Oppenheim, was forced to navigate California’s mansion tax, skyrocketing Federal Reserve rates, decades-low development and a never-before-seen state exodus.

“We have five listings coming on the market in the next 45 days, all at $30 million or above, one north of $100 [million]. So we’ve never had so many luxury listings coming on board,” Oppenheim told Fox News Digital. “So I think it’ll be great for television, it’ll be great to see if we can sell those. And I think it’s great for the Oppenheim Group. We’re pushing into the luxury market even in this difficult time.”

“There’s certainly more buyers and sellers that reach out to the brokerage, to myself and to other agents because of the show. So I think it deserves its due credit,” he continued. “I think that it definitely added fuel to the fire in terms of our growth trajectory.”

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While the company’s client list is steadily growing, Oppenheim admits their 2023 net sales didn’t match up to previous years. He noted they’ve been “hurt” most by land prices and lack of new home builds.

“2021 was our best year… and 2023 dropped a little bit from 2022, which again, I think it did for every brokerage across the country,” Oppenheim said. “We’re not immune to market conditions. And there’s been a significant decrease in trading volume in the luxury market across the country, and I’d say even more so in Los Angeles.”

“I haven’t seen so little development since I started in real estate. That’s got to do with the interest rates, the costs of developing and getting those construction loans that have increased substantially. But the other thing is the mansion tax,” he added.

This spring, a voter-approved mansion tax went into effect, adding a 4% tax on Los Angeles home sales between $5 million and $10 million, and tacking on a 5.5% tax on sales above $10 million. City officials previously stated the extra funds would be used to build affordable housing for the homeless.

“That equates to generally a 20% to 30% tax on a developer’s profits, because usually their profits amount to about 15% of the total sale price. So that made it basically a death knell for developers,” Oppenheim explained. “It’s a massive loss, financial loss for the economy in L.A. here and also for tax revenue. Each one of those developments is a micro-economy: roofers and plumbers and foundation people and architects and handymen. And it just wiped all that out.”

Oppenheim pointed out that the mansion tax has fallen short of estimates and raised $200 million so far.

“Los Angeles is seeing over a 50% sales reduction in sales over $5 million compared to the last couple of years, which is far more significant than the surrounding areas like Newport Beach, San Diego and other cities outside of California. So it’s hard not to attribute that additional slowdown to that mansion tax,” he said.

Another “elephant in the room” is the California resident exodus to states like Nevada, Arizona, Texas and Florida. In 2022, California saw a net loss of 342,000 residents, according to Census Bureau data – and with them went 352 business operations, the Hoover Institution reported.

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“If you are a wealthy person, you generally had to live in California or New York. You really didn’t have many other options, you couldn’t really vote with your feet. COVID changed that, and yet, California hasn’t understood that yet and Los Angeles hasn’t understood that yet,” Oppenheim said of the state. “So if they continue to double down on the policies that they’ve implemented the last couple of decades, then wealthy people are simply going to move and continue to move. And what we’re going to end up doing is raising taxes and actually receiving less money.”

“I just wish California and Los Angeles would wake up to the new world,” he continued. “And we have to think outside the box in terms of how we’re going to figure out how to get money for those less fortunate in our community and have the money for the services that we want to provide. Doubling down on failed policies is not the answer. The mansion tax being a perfect example.”

Though Oppenheim expects Fed rates to pause or fall in the next six to twelve months, he criticized the central bank for not acting sooner.

“I think a common-sense approach would have dictated that rates needed to be raised probably a year before they started raising rates. That free stir of COVID money was clearly causing a problem even before we started to see inflation data come in. So I think the Fed dropped the ball on being extremely delayed in raising rates in 2021. And I think that they’ve dropped the ball in keeping rates high for so long. I don’t think we’ve seen the effect yet of the high interest rates.”

But the broker argued home prices likely won’t change with future rate changes, and encouraged potential buyers and sellers to act sooner than later while taking their emotion out of the deal.

“There are a lot of people that are holding on to the 2021 and 2022 pricing and still emotional about their properties and still holding out hope,” Oppenheim said. “Sure, there’s not a ton of supply out there, but these buyers are not just jumping at things the way they were a couple of years ago. They’re not willing to sacrifice. They’re not in a hurry. They’re not going to overpay. They’re diligent, intelligent, careful, patient. And I think sellers need to understand that.”

Filming for season eight of “Selling Sunset” has reportedly just kicked off, on the heels of season seven’s premiere last month and shortly ahead of “Selling the OC’s” season three release. Taking care of business in a newly renovated office space and expanding into international markets, Oppenheim says the cast is “happier and more excited than ever before.”

“We don’t take for granted the fact that how lucky we are. And I think every season, I more and more kind of just put my guard down and look forward to it. Look forward to seeing everyone, including the people on the production team,” Oppenheim said. “And I think with the new office and the new listings, probably more excited about heading into season eight than I have been for any other season.”

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