Why this matters: Turnover directly relates to agent fees. With fewer properties changing ownership or occupancy, there are fewer transactions for real estate fees to be earned by brokers and agents.
18 out of every 1,000 California homes changed hands in the first eight months of 2024, according to Redfin. That translates into a maximum annual 2.7% homeownership turnover for 2024 in California as the peak turnover in the annual home sales cycle peaks by June.
The turnover rate is a measure of how many homes sell out of the total number of homes in a given area. In 2024, California’s homeowner turnover rate is the lowest it’s been in years. In 2019, the turnover rate was 26 out of 1,000 or 2.6%. 4% indicates a healthier housing market.
By metro area, housing turnover between January and August 2024 was:
- 17 out of 1,000 for Anaheim;
- 15 out of 1,000 for Los Angeles;
- 17 out of 1,000 for Oakland;
- 20 out of 1,000 for Riverside;
- 18 out of 1,000 for Sacramento;
- 18 out of 1,000 for San Diego;
- 17 out of 1,000 for San Francisco; and
- 17 out of 1,000 for San Jose.
Of the 50 most populous U.S. metros, Los Angeles was the metro that had homes change hands the least in 2024.
Out of the ten metros with the lowest turnover rate in the U.S., seven were in California — Los Angeles, San Francisco, Oakland, Anaheim, San Jose, Sacramento and San Diego. Our urge to relocate by moving about the state has certainly abated.
Low inventory, low turnover
The low turnover rate showcases just how frigid California’s housing market is in 2024. For-sale inventory is low, and homeowners are reluctant to relocate in the high interest rate environment. Instead, owners choose to hold onto their relatively low mortgage interest rates, and properties — low property taxes and near instant availability of reverse mortgage income.
Inventory will swell under recessionary conditions, when forced sales become a higher percentage of home and investment property sales. The still-undeclared recession is working its way through the economy. Presently, in 2024, the property market is at a standstill. Buyers and sellers have taken a wait-and-see approach.
For agents in sales or leasing transactions, low turnover spells trouble for their bottom line, and their balance sheets. Owner and tenant turnover directly translates into income for transaction agents.
In a sputtering real estate market with few properties available for sale and where few buyers compete, savvy agents need to enhance their future fee potential by:
- fostering relationships with tenants as first-time homebuyers; and
- counseling with investors who are able and willing to acquire income property in an economic downturn.
Active agents and broker-associates may also turn their expertise, and their broker, on to property management, a recession-proof faction of real estate.
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Or, agents pursue real estate-adjacent side gigs, such as becoming a:
- notary public;
- mortgage loan originator (MLO);
- real estate syndicator;
- real estate exchanger; or
- foreclosure/short sale expert.
The next sustainable expansion for real estate professionals will appear — it’s a function of the business cycle. Even amid a recession, agents have a market which demands services they can offer. Real estate owned (REO) property will reappear on the housing market landscape eventually, as the past 17 years of an upward moving market slips into a recession.
REO property is real estate the lender acquires when the homeowner loses it to foreclosure. Agents stay afloat working as an REO expert assisting buyers to locate REO properties once they hit the market or sellers (the lenders) by exposing the properties to buyers. Buyer representation agreements ensure a greater degree of bonding between the agent and the buyer.
Whatever the market, real estate always is a capital investment. People will relocate, whether for family, health or business reasons, and their move requires real estate services related to ownership or tenancy. Other than pursuing real estate-adjacent side hustles during the downturn, agents remain solvent by tending to their client and professional relationships, a critical aspect of any real estate career.
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