California has seven of the nation’s 10 lowest home turnover rates, with high home prices and low-interest mortgages keeping owners in place.
In a typical year, relocations and life changes drive housing market activity as people move from one home to another. However, in 2024, factors such as increased mortgage rates, rising home prices, and economic uncertainty have significantly slowed down turnover, especially in California’s metro areas.
According to a September analysis by Redfin, the U.S. home turnover rate has hit a 30-year low, with only 25 out of every 1,000 homes changing hands in the first eight months of the year.
Redfin’s Senior Economist Elijah de la Campa noted that despite a decrease in mortgage rates, there has not been a notable increase in the number of homes changing hands. Many listed homes have struggled to attract buyers, especially those needing additional work.
The current level of home sales is comparable to the early to mid-1990s, but with a smaller housing stock at that time, turnover rates were higher.
De la Campa mentioned that for homeowners with low mortgages, rates would need to continue falling consistently for them to consider moving on from their existing deals.
In comparison to the surge in home buying during the pandemic, there has been a significant slowdown in the market, with 37.5% fewer homes sold in 2024 than in the same period of 2021 and 31% fewer than in 2019.
Turnover rates have declined across all property types nationwide, with condos and townhouses experiencing the largest drops. The decline is attributed to an increase in condo inventory and a slowdown in sales due to rising HOA fees and insurance costs.
Furthermore, homes in suburban and rural areas tend to change hands slightly more frequently than those in urban areas.
Redfin reported a decrease in the rate of homes listed for sale in the first eight months of the year, reaching its lowest level since at least 2012. This rate, at 32 out of every 1,000 homes, is down 30% from pre-pandemic levels in 2019 and 29% from the pandemic buying surge in 2021.
Lowest Rates
Seven of the 10 U.S. metro areas with the lowest turnover rates are in California, with Los Angeles having the lowest rate where only 15 out of every 1,000 homes were sold. Other California cities on the list include San Francisco, Oakland, Anaheim, San Jose, Sacramento, and San Diego.
The report attributes California’s low housing turnover rates to long-standing tax policies, such as Proposition 13, which limits annual property tax increases. Additionally, high housing prices in California can deter potential sellers from finding affordable replacement homes within the state.
Boston, Providence, Rhode Island, and Montgomery County, Pennsylvania, also made the list of areas with low turnover rates.
Highest Rates
On the other hand, cities near California and metro areas close to New York dominate the list of regions with the highest turnover rates. Phoenix had the highest turnover rate, followed by Newark, New Jersey, Nashville, and Tampa, Florida.
The increase in home sales in these areas has been driven by workers seeking affordable housing options while working remotely, especially during the pandemic. Commuter metro areas like Newark and Nassau County, New York, maintain higher turnover rates due to the appeal of suburban living within reach of New York City.
All the cities on the list have experienced a significant drop in turnover rates since 2019, with the top three seeing declines of over 40%. These cities also led the list in 2019, although in a slightly different order.
Reasons
Low turnover rates are influenced by various factors, including rising mortgage rates, high home prices, and economic and political uncertainty.
Over three-quarters of U.S. homeowners with mortgages have rates below 5%, much lower than the peak rate of 7.52% in April. This has led many homeowners to delay selling and buying new homes at higher rates.
Record-high home prices this year have been driven by steady buyer demand, pushing prices upward. The supply of homes for sale has increased slightly from last year but remains lower than pre-pandemic levels, keeping the market tight and prices elevated.
The recent election has also impacted the housing market, with buyers and sellers holding off due to concerns about a potential recession and differing policies between the presidential candidates.
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