Neighborhood Turnover Rate Calculator
Analyze the real estate velocity and stability of your specific farm area or community.
What is a Neighborhood Turnover Rate?
The neighborhood turnover rate is a critical metric used by real estate agents, investors, and homeowners to measure the frequency with which properties in a specific geographic area change hands within a given year. It represents the "velocity" of the local housing market.
How to Calculate Neighborhood Turnover
The formula for calculating turnover is straightforward:
Why This Metric Matters
- Real Estate Agents: High turnover areas (typically 5% or higher) are often the best "farm" areas for prospecting because they indicate a higher probability of future listings.
- Investors: Turnover helps determine how liquid the market is. If you flip a house in a low-turnover area, it may sit on the market longer.
- Homebuyers: A very low turnover rate often signals a "stable" neighborhood where residents stay for decades, which can indicate high school quality or neighborhood satisfaction.
Example Calculation
Imagine a subdivision called "Oak Creek" that contains 400 total residential properties. In the last 12 months, property records show that 12 homes were sold and closed in that community.
To find the turnover rate:
- Sold: 12
- Total: 400
- Calculation: (12 / 400) = 0.03
- Result: 3% Turnover Rate
In this scenario, a 3% turnover rate suggests a relatively stable neighborhood where roughly 1 out of every 33 homes sells each year.
Interpretation of Results
| Turnover Rate | Market Characterization |
|---|---|
| 0% – 2% | Highly Stable / Low Velocity |
| 3% – 6% | Moderate / Balanced Turnover |
| 7% + | High Velocity / Active Market |