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Residential turnover rates signal changes in California real estate

On Behalf of | Nov 4, 2022 | Real Estate Law & Litigation

California’s hot — some would say overheated — housing market has received some big shocks over the past few years, and now there are signs that suggest it will be cooling off for some time.

One sign of change can be found in the state’s residential turnover rate. According to data from the U.S. Census Bureau, fewer Californians moved in 2021 than in any time in the past 10 years.

The residential turnover rate for renters in 2021 fell from 17% in 2019 to 15.6% in 2021. The effect was less pronounced for homeowners with a 7% turnover rate sitting just about level with the 2019 rate.

Musical chairs

While it’s not exactly the same as the music stopping in California real estate’s game of musical chairs, analysts see these statistics as indicators that the market is slowing down.

Analysts have several possible explanations. One is that foreclosure and eviction moratoriums were in place for much of 2021. Another is that California saw big changes in real estate investment over the past couple of years.

Office space suddenly became less valuable in 2020 and 2021, and so investors changed their focus to the high end of the residential real estate market. This led to prices going up for everyone, out of the reach of many individual buyers.

Now, analysts warn that inflation and rapid increases in interest rates are likely to keep the market cool for the foreseeable future. As a result, many homeowners who have been considering selling may now decide to wait a few years until they know they can get a good price.

The picture for brokers

Lower turnover rates could mean trouble for brokers and others whose businesses depend on real estate transactions. When the market is more difficult, it’s more important than ever that professionals in the real estate industry seek out legal help.