Homeowners stay put in California because they’re locked into low property taxes.

California homeowners tend to hold onto their houses for a long time because a state tax law incentivizes them to do so. Proposition 13, adopted in 1978, mandates that homeowners pay property taxes of 1% of their home’s assessed value, and strictly limits tax increases.

Many California homeowners are locked in not just by low property taxes, but by low mortgage rates. Mortgage rates hovered between 3% and 5% from 2010 to the start of 2022, dropping to a record low of under 3% at the height of the pandemic moving frenzy. Since early 2022, mortgage rates have been sitting in the 6% to 8% range. Selling a home where you pay a 3% mortgage rate to move and take on a 7% rate would significantly increase a homeowner’s monthly payment—and in California, your property tax bill would also jump.

It’s worth noting that California’s Proposition 19, which was designed to allow older homeowners to keep relatively low tax rates when they move, went into effect in 2020. It’s unclear how effective Prop 19 has been at freeing up housing inventory.

Zooming out to the nation as a whole, homeowner tenure has flattened out over the last few years. After peaking at 13.4 years in 2020, average tenure declined to 11.8 years nationwide in 2023 and stayed the same in 2024.

Source: https://www.businesswire.com/.../The-Typical-U.S....