Every Angeleno has at least one person on their block who has lived there for decades. Mid-rise apartment buildings may have sprouted up all around them, but their well-kept bungalow and postage-stamp-sized lawn have become fixtures of the neighborhood itself.
And with California’s lenient property tax laws and regulations, which dictate that a home’s taxable value is based on its purchase price, not the current market value, there is little incentive for some homeowners to continue climbing the property ladder.
A recent report from Redfin found that Los Angeles’ median homeowner tenure (a fancy phrase for how long someone has lived in their current home) increased from 12.2 years in 2010 to 17.3 years in 2020 — a difference of more than five years.
Rising home prices, coupled with the state’s severe housing shortage, have caused Angelenos to remain in their homes longer. The supply of lower-priced starter homes has plummeted as a result, exacerbating affordability issues for first-time buyers hoping to break into the market.
The COVID-19 pandemic has further discouraged Los Angeles residents from listing their homes, raising the median homeowner tenure by 0.6 years between 2019 and 2020. As of November, the median sale price of a home in the LA metropolitan area was $715,385. Although we’re firmly in seller’s market territory, homeowners may be put off by reports of widespread bidding wars, moving challenges or virus exposure concerns.
“Consequently, a lot of families are opting to refinance their mortgages so they can benefit from record-low interest rates without putting their houses up for sale,” wrote Redfin Chief Economist Daryl Fairweather.
This phenomenon is playing out in most parts of the country. The typical American homeowner has lived in the same home for 13 years, compared to 8.7 years in 2010 and 6.4 years in 2005. Additionally, a quarter of all US homeowners have stayed put for over 20 years, up from 14.3 percent in 2010 and 8.6 percent in 2005.
Those who bought homes at rock bottom prices in the aftermath of the recession have built tremendous equity in their properties over the years but may not be willing to sell during such a precarious time. Another contributing factor is the rising popularity of aging in place, where seniors opt to remain in their homes rather than move into an assisted living facility.
Only 15 of the 42 markets surveyed by Redfin reported declining homeowner tenures, led by migration hotspots like Charlotte, NC and Sacramento, CA. These markets have seen an influx of remote workers relocating from pricier metros in search of larger homes at more affordable prices.
While there’s hope that more LA homeowners will put their properties up for sale once the pandemic subsides, they may choose to stick around longer than previously thought.