Source: Point2Homes —
Key Highlights:
- California’s 30 largest cities posted significant differences in homeowner tenure in 2022: Salinas residents spent 9.3 years in their home before selling it, while owners in Elk Grove who changed homes did so after just 2.3 years, on average.
- Boasting the second- and third-longest tenures, Fremont and San Diego nevertheless trailed Salinas: Here, residents stayed put around 6 years before becoming antsy.
- Of the top 5 largest cities, San Diego residents spent the most time in a home (6 years), while San Francisco and San Jose owners averaged around 5.5 years. Los Angeles owners spent just under 5 years in one home, while residents in Fresno, California’s fifth largest city, moved after just 3.9 years.
- Perhaps unsurprisingly, owners spent more time in a home the larger it was. What is surprising, though, is that owners of homes between 500 and 1,000 square feet spent almost as much time living in the same home as owners of big mansions did: 5 years.
- Compared to 2019 (the last year before the pandemic brought about the avalanche of change that people are still trying to adapt to) homeowner tenure has increased: The time Californians spent in a home before selling went from 4.4 years in 2019 to a median of 4.8 years in 2022.
- Approach: Homeowner tenure is defined as the time (in years) between the most recent sale date of a property and the previous date it changed owners. For this study, we used sold data from our sister company PropertyShark, looking at home sales in the 30 largest cities in California in 2019, 2020, 2021 and 2022. We took into consideration all properties with at least 2 sales dates, excluding properties that didn’t change owners at least once.
In the real estate industry, there’s the so-called five-year rule, which states that homebuyers should wait at least five years before selling and moving, to avoid losing money. That’s because transaction costs like the agent’s commission, inspection-related fees and also the closing and moving costs typically add up to 15% to a home’s sale price. Assuming a 3% to 5% annual home value appreciation, it could take around five years to cover those transaction costs and get a better deal.
But, as it appears, owners in several California cities aren’t worried about that: With average tenures between 2.3 and 4.9 years, homes in 12 of the 30 largest cities switched owners much faster than recommended. What’s more, even if these numbers seem very small, Californians were noticeably faster to sell four years ago: In 2019, owners in 17 of the 30 most populous cities sold their homes after less than five years.
Homeowner Median Tenure in California’s 30 Largest Cities is 4.8 Years
Californians live longest in homes that are either 5,000+ square feet or 500-1,000 square feet.
In California’s 30 largest cities, the median tenure was 4.8 years, which was just less than the recommended timeframe of 5 years. This amount of time would theoretically increase a buyer’s chances of recouping transaction costs, although there are, of course, no guarantees.
That said, there seems to be quite a difference between condo owners and single-family homebuyers: Condo owners spent more time in their home before selling (5.3 years) compared to single-family owners (4.7 years). Whether they enjoy the practicality of the condo lifestyle or they value the affordability, condo owners in the Golden State’s largest urban hubs were a bit more attached to their homes than single-family residents.
This trend also became obvious when analyzing homeowner tenure based on home size. According to the data, Californians love the extremes: With median tenures of 5.0 and 5.1 years, it was either the largest homes or the second-smallest homes that kept owners in place the most. Homes of 5,000 square feet and above, as well as homes between 500 and 1,000 square feet, boasted the longest tenures. Conversely, homes between 1,001 and 4,999 square feet had median tenures of 4.8 and 4.9 years.
When it comes to new homes and homes that have been on the market for a while, the clear winner was… the middle-aged home: With average tenures of 5.5 and 5.4 years, homes between 11 and 20 years old, and also homes between 21 and 50 years old were the most appealing to Californians. The least appealing homes? New ones. Owners of homes less than 5 years old tended to spend only around two years in them before moving.
This could be because new homes are usually starter homes: As such, they’re extremely attractive to first-time buyers, who are willing to sacrifice location and even square footage for a lower price. And, because a starter home is usually more affordable, it allows new homeowners to get a foot on the property ladder.
But, if there’s a strong reason to upgrade — like a growing family or a new job — Californians will do so in a heartbeat. And, given the accelerated home price appreciation of the last few years, changing homes might just have been easier than ever before: Many owners may have been eager to cash in equity and use the funds elsewhere.
However, it’s possible that many Californians are selling after a short period of time and possibly not buying another home in the same state. According to an analysis by the Public Policy Institute of California (PPIC), the state has been losing residents since 2001:
