Jacob Gerber, 42, and Brianna Gerber, 37, bought their home in Rossmoor in 2011 with plans to either move to a better home or remodel. The couple has two children, Isabel, 6 1/2, and Nicholas, 3 1/2.They looked for a home to buy that was more modern and met their needs but nothing was available, so they gutted the home and rebuilt it the way they want. (Photo by Matt Masin, Orange County Register, SCNG)

Jacob Gerber, 42, and Brianna Gerber, 37, bought their home in Rossmoor in 2011 with plans to either move to a better home or remodel. The couple has two children, Isabel, 6 1/2, and Nicholas, 3 1/2.They looked for a home to buy that was more modern and met their needs but nothing was available, so they gutted the home and rebuilt it the way they want. (Photo by Matt Masin, Orange County Register, SCNG)

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Jacob Gerber, 42, and Brianna Gerber, 37, bought their home in Rossmoor in 2011 with plans to either move to a better home or remodel. The couple has two children, Isabel, 6 1/2, and Nicholas, 3 1/2.They looked for a home to buy that was more modern and met their needs but nothing was available, so they gutted the home and rebuilt it the way they want. (Photo by Matt Masin, Orange County Register, SCNG)



After two years of searching fruitlessly for a new home, Jacob and Brianna Gerber decided instead to remodel their Rossmoor house of six years and stay put.

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$84,000 is low-income in O.C. They moved their garage, gutted and rebuilt their home’s interior and expanded the backyard living area. They added a spa, enlarged the master bedroom and installed a new sound system.

“I was always on Redfin. Was there a good trade-off to move to? There was nothing out there,” said Brianna Gerber, 37. “(We decided), ‘let’s build our dream home the way we wanted it with all the touches that we wanted in the location we wanted.’ ”

The Orange County family is part of a growing trend in which homeowners are staying put longer and longer.

Southern Californians selling their homes this past spring had owned them for an average of 9.4 years, according to Attom Data Solutions, an Irvine-based housing research firm. By comparison, the average ownership tenure in the spring of 2008 was 4.6 years, or half as long.

Reasons are varied. They include changing demographics, possible tax consequences, rising mortgage rates and difficulty finding the next home, experts say.

The trend is not inconsequential.

Staying put longer can stymie economic growth while stifling business for those who depend on home sales for their livelihoods. And it’s contributing to the current shortage of homes on the market.

“It’s creating a logjam of inventory, especially in the first-time buyers’ category,” said Daren Blomquist, senior vice president for Attom Data Solutions. “Move-up buyers are staying in their homes longer, and that affects the first-time buyer.”

A national trend

The Southern California pattern is similar to what’s happening throughout the nation.

A National Association of Realtors survey found home sellers had lived in their homes for nine or 10 years in recent years, said NAR Chief Economist Lawrence Yun. Historically, the average was six to seven years.

“It’s not a California issue,” Yun said. “People nationwide are staying in their homes longer.”

Metro areas with the longest gaps between sales last spring included Boston and Hartford, Conn., averaging 11.9 years each, Attom figures show. The gap averaged 10.3 years in Providence, R.I., 9.9 years in San Francisco and 9.7 years in San Jose.

“When I started 30 years ago, the state average was five or six years,” said Geoff McIntosh, a Long Beach broker and 2017 president of the California Association of Realtors.

“The turnover rates have just stopped.”

A sort of feedback loop perpetuates the trend.

Difficulty finding that next home discourages homeowners from selling. That, in turn, contributes to the shortage of homes for sale.

“The one thing we’ve heard consistently is with housing affordability being what it is, even with having a lot of equity … (homeowners) are concerned how much purchasing power that equity gets them,” said Michael Mahon, president of First Team Real Estate. “The choice is: remain where they are, enjoy that home a little longer.”

Imprisoned

Mark Fleming, chief economist for Santa Ana-based First American Financial Corp., likened this sales trend in a recent blog post to a “prisoner’s dilemma.”

If more homeowners put their homes up for sale, they would have more homes to choose from. But as more homeowners stay put, those who want to sell face a supply shortage, bidding wars and escalating prices.

“Sellers face a prisoner’s dilemma, a situation in which individuals don’t cooperate with each other, even though it is seemingly in their best interest to do so,” Fleming wrote. ” … If they both choose to sell, they both benefit because they increase the inventory of homes available, and collectively alleviate the supply shortage.”

In addition, a recent rebound from historically low mortgage interest rates locks many owners into their current homes, he said. Fixed rates as low as 3.3 percent and adjustable rates as low as 2.4 percent are long gone.

“Why move when it will cost more each month to borrow the same amount from the bank?” Fleming wrote. ” … Existing homeowners are increasingly financially imprisoned in their own home by their historically low mortgage rate. It makes choosing a kitchen renovation seem more appealing than moving.”

Taxes are another deterrent.

California’s Prop. 13 keeps property taxes low for homeowners — so long as they keep their current home and don’t buy another. If they move, their taxes jump to current market rates, which can be two or three times higher than taxes for their old homes.

But the tax consequences don’t stop there.

Ordinarily, you can sell your home tax free if its value increased by $250,000 or less for unmarried owners and by $500,000 or less for married couples.

In volatile housing markets like California, however, value gains often exceed the exempted amount, meaning sellers face capital gains taxes when they sell.

“Prices have run up so dramatically,” Yun said. “The capital gains implication has become an issue. … Some people say, ‘I don’t want to pay money to the federal government.’ ”

Aging baby boomers also are choosing to live out their days in their existing homes, keeping them off the market.

Seventy-one percent of people aged 55 and older have been living in their homes for 18 years or longer, a California Association of Realtors analysis of U.S. Census figures show. Almost a fourth of them have been in the same home for the past 39 years.

McIntosh, CAR president, noted that in some cases, families are moving in with their aging parents, providing elder care and inheriting the home when their parents die.

“The kids win, the parents win,” McIntosh said.

Slower growth?

So with more homeowners staying put, is that bad for business?

After all, business is booming.

From January through June, more than 95,500 homes changed hands in Orange, Los Angeles, Riverside and San Bernardino counties, the most for that period since 2006, CoreLogic figures show.

Interviews with escrow officers and home inspectors from the Coachella Valley to the San Fernando Valley indicated their business also is up.

“It’s been as busy as we can take it,” said Bill Schultz, a Coachella Valley home inspector. “Right now, we’re kind of in that same frenzy that we were 12 to 15 years ago.”

John LaRocca, president of Burbank-based LaRocca Inspection Associates, said his company hired six inspectors this year.

Nancy Glass, owner of Cardinal Escrow in Long Beach, hired three new people in the last four months.

“We’re growing,” Glass said.

On the other hand, how busy would things be if people moved more frequently? Wouldn’t that trigger even more sales?

Sure, home sales are at an 11-year peak, the most transactions for the region since the days of the housing bubble. On the other hand, year-to-date home sales still are 24 percent below the year 2000, before the housing bubble and after a 14 percent increase in the region’s population.

In 2000, almost 126,000 homes changed hand in the region during the first half of the year.

“The impact is a slower-than-usual economic growth,” Yun said. “If the inventory were larger, there would be much more home sales, and that would affect economic growth.”

Renovations up

One sector of the market not suffering is home remodeling.

Annual expenditures on home remodeling projects in Southern California increased steadily since 2010, rising 38 percent to $2.2 billion in 2016, building permit figures compiled by the Construction Industry Research Board show.

The Gerbers in Rossmoor loved their home’s location more than the house itself when they bought the 59-year-old Plymouth-style ranch home in December 2011. The 2,800-square-foot house sits in a quiet cul-de-sac not far from Brianna’s parents, who help out with their two children, ages 3 and 6.

But the master bedroom closets were small and sat in the bathroom. The house was getting old, with leaky sinks, cracked stucco and an aging roof. It lacked insulation in the walls and didn’t have air conditioning. The long, galley-style kitchen was out of date.

But they wanted to avoid the hassle of remodeling, so Brianna started looking for another house to buy. Nothing worked. Either the prices were too high, the locations were inferior or the homes weren’t upgraded.

So they hired Rossmoor remodeling contractor Eddie Kesky and invested about $750,000 in renovations: The family moved the master bedroom to the back, converted the detached garage in the backyard into an outdoor patio with a fireplace and dining area, built an attached garage at the front and opened up the kitchen so the family can gather around a new island counter for meals. They insulated the walls and installed air conditioning.

“Now we have the home that has the sound system and fits into our needs,” said Jacob Gerber.

Israel Battres, owner of Battres Construction in Santa Ana, said the Gerbers’ decision to stay put is common these days.

“Most of my homeowners are staying put and remodeling,” Battres said. “It’s a seller’s market. If they go and sell their home, they’re going to move into a place that needs remodeling. So they choose to stay in their home and make it their forever home.”

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