How long does your average homeowner client own before selling and moving? This concept of how often homeowners move, called homeowner tenure, has significant implications for the incomes and livelihoods of real estate professionals.
Homeowners are moving significantly less today compared to even just a few years ago. In 2019, the average U.S. homeowner has lived in their home for 13 years, up from 10 years in 2010, according to Redfin.
Here in California, homeowner tenure in 2019 is:
- 16.8 years in Los Angeles, up from 12.3 years in 2010;
- 15.8 years in Anaheim, up from 11.7 years in 2010;
- 15.2 years in San Jose, up from 11.7 years in 2010;
- 14.6 years in Oakland, up from 10.8 years in 2010;
- 14.2 years in San Diego, up from 10.7 years in 2010;
- 14.1 years in Fresno, up from 10.2 years in 2010;
- 14.0 years in San Francisco, up from 9.8 years in 2010; and
- 13.8 years in Bakersfield, up from 8.8 years in 2010.
As seen on the state’s metro level, California homeowners remain in place longer than the typical U.S. homeowner today.
Why is homeowner tenure lengthening?
There are two big reasons for the increase. First, demographically speaking, the senior population is growing rapidly across the U.S.
In California, the population of individuals 65 years and older is 14% of the state’s total population. Four-out-of-five of this age group are homeowners. As medical advances and new home solutions allow seniors to remain independent longer, they increasingly choose to age in place.
As seniors remain in their homes longer, their homes that otherwise would have been listed remain off the market, contributing to a low for-sale inventory.
Second, rapid home price growth coupled with low inventory over the past decade has made it difficult for homeowners to sell, for fear of being unable to find suitable replacement homes.
A problem for agents
Most problematic for real estate professionals as homeowner tenure lengthens is lower turnover. Without turnover, homes don’t sell and agents don’t get paid.
Homeowner turnover is lowest in California’s priciest metros, like San Francisco and Los Angeles. It’s highest in lower-cost areas of the state, like Bakersfield, San Diego and Fresno.
Metros with high home prices — and low turnover — suffer from a lack of residential construction, insufficient to keep up with the needs of our growing population. Demand outpaces supply and prices rise faster than can be supported by most incomes.
This hyper-price environment can be exciting for real estate agents and investors. But it prevents turnover from reaching a viable level, reducing the number of transactions closed and fees earned for agents.
The solution is ultimately more construction. California legislators are working to induce local governments to loosen zoning regulations and provide building incentives for multi-family builders. But the going is slow, and there are literally millions of units to build before we are caught up to demand. Agents can get involved at the local level to encourage more construction and new turnover.