Owners sticking around is new norm

What if homeowners are simply not selling because they like their homes?

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.

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.

Top line

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 four 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 long before historically cheap mortgages. It’s a similar tale nationwide.

Homes sold in the 42 big metros outside the Golden State had been owned for 8.4 years in 2023 versus 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 U.S. 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 it’s 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 financial and emotional ties 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 something of a new norm.

Barring some dramatic economic or real estate upheaval — not to mention, death, divorce or debts — many folks have gotten