Why California owners aren’t selling? Maybe they like their homes
California sellers averaged 10.6 years of ownership last year – up from 9.8 in 2019 and 5.5 in 2003.
“Numerology” tries to find reality within various measurements of economic and real estate trends.
Buzz: What if homeowners are simply not selling because they like their homes?
Source: My trusty spreadsheet reviewed home transaction data from Attom tracking last year’s sales by length of ownership, price sold, and profits – the difference between sale and purchase price. The focus was on the 50 most-populated metro areas, including eight California markets.
Fuzzy math: The home-selling industry seems quite upset that homeowners aren’t moving like they once did. Ownership lengths have essentially doubled in the past two decades, and transaction levels tumbled to historic lows in 2023.
Topline
Last year’s sellers in these big California metros owned for an average 10.6 years – up from 9.8 in pre-pandemic 2019 and 5.5 in 2003. That’s ownership duration that grew by eight months in 4 years and was 5.1 years longer over 20 years.
And the typical seller was cashing in on some handsome profits: a $747,500 home with a $311,000 gain.
So you see, the growing length of ownership was happening way before historically cheap mortgages. It’s a similar tale nationally.
Homes sold in the 42 big metros outside the Golden State had been owned for 8.4 years in 2023 vs. 8.2 in 2019 and 3.7 in 2000. That’s two months more over four years and 4.7 years longer over 20. Last year’s typical US seller moved from a $375,000 home with a $174,000 gain.
Bottom line
The why of this all is largely a lot of guesswork.
Some real estate gurus suggest that owners with low-rate mortgages are unwilling to part with their financing bargains obtained in the heat of the pandemic era’s stimulus boom. But conversely, many owners can’t afford to buy anything else – as the sharp rebound in mortgage rates and soaring prices slashed affordability.
Also, selling is quite the hassle – and expensive. Paying for various transaction services – never mind the move itself – can cost 10% or more of the purchase price. And some ownerships have been so profitable, there are capital gains taxes to consider, too.
Plus, there’s that pride of ownership that comes with lengthy stays. If you’ve owned a home for a decade or more – you’ve likely upgraded it. So you’ve got a financial, and likely emotional, tie to the place.
So I’m willing to bet that the current state of the market – a meager number of homes for sale and limited transactions – becomes somewhat a new norm.
Barring some dramatic economic or real estate upheaval – not to mention, death, divorce or debts – too many folks have gotten very comfortable in their current residence.
They’re NOT moving!
Locally speaking
Ponder the eight big California metros among the nation’s Top 50 and how the ownership longevity of last year’s sellers stacks up, ranked by ownership duration of 2023 sellers. The Bay Area had numerous long-time owners cashing out …
San Francisco: Owned 11.9 years – sixth-highest of the 50 – vs. 10.5 years in pre-pandemic 2019 and 5.7 in 2003. That’s 1.4 more in 4 years (the biggest increase) and 6.2 longer ownership over 20 years, No. 6. Last year’s seller had a $1.01 million home with a $460,000 gain.
San Jose: 11.7 years – No. 7 – vs. 10.5 in 2019 and 5.7 in 2003. That’s 1.2 years more in 4 years (No. 3) and 6 years longer over 20, No. 8. Last year’s seller: $1.4 million home with a $755,000 gain.
Fresno: 10.9 years – No. 8 – vs. 10.1 in 2019 and 6.1 in 2003. That’s 10 months more in 4 years (No. 6) and 4.7 years longer over 20, No. 22. Last year’s seller: $380,000 home with a $110,500 gain.
Los Angeles-Orange County: 10.2 years – No. 13 – vs. 10.1 in 2019 and 5.5 in 2003. That’s 1 month more in 4 years (No. 29) and 4.8 longer over 20, No. 21. Last year’s seller: $880,000 home with a $380,000.
San Diego: 10.3 years – No. 12 – vs. 9.9 in 2019 and 5.4 in 2003. That’s 6 months more in 4 years (No. 15) and 5 years longer over 20, No. 18. Last year’s seller: $830,000 home with a $330,000.
Sacramento: 10.5 years – No. 11 – vs. 9.3 in 2019 and 5.2 in 2003. That’s 1.1 years more in 4 years (No. 4) and 5.3 years longer over 20, No. 15. Last year’s seller: $545,000 home with a $160,000 gain.
Inland Empire: 9.6 years – No. 16 – vs. 9.3 in 2019 and 5.4 in 2003. That’s 4 months more in 4 years (No. 23) and 4.2 years longer over 20, No. 35. Last year’s seller: $540,000 home with a $190,000 gain.
Bakersfield: 9.4 years – No. 17 – vs. 9 in 2019 and 5.1 in 2000. That’s 5 months more in 4 years (No. 17) and 4.3 year slonger over 20, No. 33. Last year’s seller: $330,000 home with a $105,000 gain.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com