Did Proposition 13 Affect the Mobility of California Homeowners ?

Abstract

In 1978, the voters of California cut the property tax paid by home owners whenthey passed Proposition 13. However, home owners lose much of this tax savings if they sell their homes and buy others, because, under Proposition 13, recently purchased property is assessed at a higher rate. This may create a lock-in effect, and as a result home owners may be less likely to move from their present homes. Using the Census Bureau's Annual Housing Surveys (1975, 1978, 1982), I compare home owner mobility rates after Proposition 13 with rates immediately prior to the initiative. I find that mobility did decline in the years immediately after the introduction of Proposition 13. However, the data suggest the decline in mobility in California may be simply a part of a national decline in mobility, because there was a concurrent decline in mobility in the rest of the nation.