California's Property Tax Paradox: Why LA Homeowners Stay Put for Nearly 20 Years
The Property Tax Lock-In: California's Homeownership Stalemate
In Los Angeles, homeowners are staying put—for a long time. The typical LA homeowner remains in their property for an astounding 19.4 years, the longest tenure of any major U.S. metropolitan area and a record high for the region. This phenomenon isn't isolated to LA; across California's major cities, homeowners are holding onto their properties significantly longer than the national average of 11.8 years.
San Jose follows closely behind LA with 18.3 years of median homeowner tenure, while San Francisco (16.8 years), San Diego (14.7 years), and Riverside (12.1 years) all exceed the national average. This California-wide trend points to a unique set of circumstances creating what economists call a "lock-in effect"—and it's reshaping the state's housing landscape.
The Proposition 13 Effect: California's Golden Handcuffs
The primary culprit behind California's extraordinary homeowner tenure rates? Proposition 13—a 1978 tax law that has become both a blessing for long-term homeowners and a barrier for prospective buyers.
Here's how it works: Under Proposition 13, California property taxes are fixed at 1% of a home's assessed value at purchase, with annual increases capped at just 2%, regardless of actual market appreciation. This creates a powerful financial incentive for homeowners to stay put, especially in areas where property values have skyrocketed.
Consider this real-world example: A homeowner who purchased a Los Angeles property for $200,000 in 1990 would have initially paid about $2,000 annually in property taxes. Today—despite that same property potentially being worth $1.2 million—their annual tax bill remains under $5,000 due to Proposition 13's strict limits on assessment increases. If they sold and purchased another similar property, their new tax bill would jump to approximately $12,000 annually.
"For many California homeowners, especially in expensive coastal markets, the financial math simply doesn't add up to move," explains Gregory Eubanks, a Redfin Premier agent in Los Angeles. "Even if they're looking to downsize, they often face higher monthly costs despite purchasing a smaller home."
The Double Lock-In: When Low Mortgage Rates Meet Low Property Taxes
While Proposition 13 has been influencing homeowner behavior for decades, recent years have introduced a second powerful factor keeping Californians in place: historically low mortgage rates.
From 2010 to early 2022, mortgage rates generally ranged between 3% and 5%, even dipping below 3% during the height of the pandemic. But since 2022, rates have largely hovered between 6% and 8%. For homeowners with mortgages in the 2-3% range, selling means not only giving up advantageous property tax rates but also exchanging an inexpensive mortgage for one with substantially higher interest costs.
"Long-term homeowners typically enjoy remarkably low monthly payments," Eubanks noted. "Even when utilizing their substantial equity as a down payment on a new home, they'd face significantly higher monthly obligations because both home prices and interest rates have climbed dramatically."
This powerful double lock-in effect explains why California metros dominate the list of areas with the largest increases in homeowner tenure over the past decade. After Providence, RI (which saw tenure increase from 10.9 to 16.8 years), Los Angeles, San Jose, and San Francisco experienced the most significant jumps in how long homeowners stay put.
The National Picture: Tenure Down from Pandemic Peak But Still Historically High
While California's situation is extreme, extended homeowner tenure is a nationwide phenomenon. The typical American homeowner stays in their home for 11.8 years—nearly double the 6.5-year average recorded in 2005.
After peaking at 13.4 years during 2020, national homeowner tenure has declined slightly but remains historically elevated. The pandemic-era combination of record-low interest rates and remote work flexibility triggered significant relocations, temporarily reducing average tenure. However, as mortgage rates climbed, the market cooled significantly through 2023-2024, stabilizing tenure rates.
Several demographic factors contribute to the long-term increase in homeowner tenure across America:
- An aging population, with older homeowners less likely to relocate
- Baby boomers and older Gen Xers choosing to age in place
- Financial incentives keeping established homeowners in their current properties
- Many older Americans owning their homes outright or having very low mortgage rates
By contrast, the metros with the shortest homeowner tenure—Louisville, KY (8 years), Las Vegas (8.4 years), and Charlotte, NC (8.7 years)—share a common characteristic: relative affordability. With typical home prices under $440,000 in these markets—less than half of what homes cost in Los Angeles—financial barriers to moving are significantly lower.
The Generational Divide: Winners and Losers in the Tenure Gap
While extended homeowner tenure benefits long-term property owners, it creates significant challenges for others, particularly younger generations attempting to enter the housing market. As Redfin Senior Economist Sheharyar Bokhari observed, "It's understandable that many Californians hang onto their homes, as they're financially motivated to do so. But it's a problem for young people trying to break into the state's notoriously expensive housing market."
The implications are far-reaching:
- Reduced housing inventory, particularly in desirable urban areas
- Further upward pressure on already elevated home prices
- Widening of the generational homeownership gap
- Concentration of housing wealth among older generations
- Creation of "house rich, cash poor" scenarios for many long-term owners
In response to these concerns, California implemented Proposition 19 in 2020, which allows older homeowners to retain relatively favorable tax rates when moving within the state. However, early evidence suggests limited effectiveness in significantly increasing housing inventory.
Market Insights: Understanding America's Homeowner Tenure Trends
Why are California homeowners staying put so long?
The combination of Proposition 13's property tax benefits and recent low mortgage rates creates powerful financial incentives against moving. For many homeowners, selling would mean doubling or tripling both their property tax obligations and mortgage interest rates simultaneously.
Is the lengthy homeowner tenure unique to expensive markets?
While most pronounced in high-cost areas, extended homeowner tenure is a national trend. The U.S. average of 11.8 years is nearly double what it was in 2005. However, more affordable metros like Louisville, Las Vegas, and Charlotte still show significantly shorter tenure periods of 8-9 years.
How are homeowners adapting to stay in their properties longer?
"Many older homeowners are adding on and creating multigenerational homes, with their kids and grandkids moving onto the property," notes Eubanks. "And even those who do relocate often retain their original property as a rental, leveraging low carrying costs into investment income."
Will housing costs decrease if homeowner tenure returns to historical norms?
Housing economists generally agree that a significant increase in inventory would help moderate price growth. However, the powerful financial incentives keeping homeowners in place, particularly in high-cost markets like California, make a return to historical tenure rates unlikely without major policy changes.
What implications does this have for future housing policy?
The extended homeowner tenure highlights tensions between protecting established homeowners and creating opportunities for new buyers. Future policy discussions will likely center on balancing property tax protections for existing owners while addressing inventory constraints and affordability challenges for prospective homebuyers.
