Home Sellers Are Really Cashing In These Days

Dated: February 6 2018

Views: 380

house-sellers-cashing-in


Kenishirotie/iStock

Home sellers had it good at the end of last year, racking up profits they hadn't seen in more than a decade, a new report finds.



In the last quarter of 2017, sellers pocketed an average $54,000 over what they originally paid for their homes, according to a recent ATTOM Data Solutions report. That's up 0.49% over the previous quarter and nearly 14.6% over the same quarter the previous year.


And it's the most sellers have netted, an average 29.7% profit, since the third quarter of 2007. Thank the national housing shortage for those sky-high returns.


"If you're selling, you're taking advantage of a red-hot housing market with low supply, high demand, and fast-appreciating home prices in many areas," says Daren Blomquist, senior vice president at ATTOM, a real estate information firm.


To come up with those figures, ATTOM compared the median home prices in the last quarter of the year to just over eight years ago (the average amount of time owners stay in their homes before selling). ATTOM looked at recorded sales deeds, foreclosure filings, and loan data for its report. Only metros with sufficient historical data and a large enough population, mostly 200,000 and up, were included.


West Coast homeowners did the best. Sellers in Silicon Valley's uber-pricey San Jose, CA, scored the biggest profits, of about 90.9%. That was followed by San Francisco, at 73.3%; Merced, CA, at 64.6%; Seattle, at 64.4%; and Santa Cruz, CA, at 59.8%.


"Those are the markets that were more insulated from the downturn, because many of them are highly desirable, on the coast with well-paying jobs. They were the first to recover when things turned around," Blomquist says.


But they're not the only ones doing well.


"This housing boom started on the coasts, but is spreading to the middle of the country," Blomquist says.

More than half of all of the metros included in the analysis saw record-high home prices in 2017. Some of the bigger names were San Francisco, Los Angeles, Dallas, Houston, and Atlanta.


Homeowners are staying put


The downside for sellers was that the same housing shortage and ultrahigh home prices are hindering many of them from trading up and finding a nicer or larger home in their area. After they unload their properties, they still need a place to live.


That could help to explain why homeowners stayed put for record lengths of time. Those who sold their properties in the last quarter of the year had owned them for about 8.18 years. That's a slight increase from 8.12 years in the previous quarter and 7.78 years a year earlier.


It's also the longest homeowner tenure since data began being collected on it in 2000.


A stronger economy means more all-cash sales, fewer foreclosures


In a sign of a stronger economy, more buyers are also opting to pay all cash for their residential real estate. These sales made up 29% of single-family home and condo sales in 2017. That's up from 28.7% in 2017.

The metros with the most all-cash sales were Mobile, AL, at 69.8%; Binghamton, NY, at 60.9%; Macon, GA, at 57.7%; and Columbus, GA, at 56.2%.


"If you're a buyer in this housing market, it's a full-contact sport," says Blomquist. "The buyers with the most cash often win."


Meanwhile, distressed sales (think short sales, bank-owned sales, and foreclosure auction sales) fell to a 10-year low, to make up only about 14% of all single-family home and condo sales. That's a drop from 15.5% a year earlier.


"There's fewer people going into foreclosure because if someone does get into trouble or lose their job, they have equity in their home that can provide a cushion," Blomquist says.


The metros with the most distressed sales were Atlantic City, NJ, at 39.4%; Mobile, AL, at 32%; Montgomery, AL, at 29.9%; Fayetteville, NC, at 27.3%; and Akron, OH, at 25.3%. ATTOM included only 203 metros with at least 200,000 residents in this analysis.


Meanwhile, institutional investors (e.g., private equity firms, pension and hedge funds) flocked to Memphis, TN. About 10% of its sales were to investors. It was followed by Columbus, GA, at 8.6%; Birmingham, AL, at 8.3%; Killeen, TX, at 7.3%; and Macon, GA, at 7.3%.


Source

Blog author image

Mark Ross

For Mark Ross, founder of Ross NW Real Estate and professional real estate broker, real estate has always been the career of choice. During his 25+ years in the industry, Mark has gained experience in....

Latest Blog Posts

The Housing Market Is Hot But Not In A Bubble

Existing home sales came in at a whopping 6,850,000, beating estimates with the highest print since 2006. Days on market fell from 36 days to 21 days on a year-over-year basis. Cash buyers remain at

Read More

10 Ways To Enjoy Your Outdoor Living Space All Year

Some believe that the end of summer also marks the final days of enjoying outdoor barbecues, parties, and casual get-togethers. Yet, just by adding a few design elements to your outdoor space, you

Read More

3 Ways To Tap Your Home Equity And Which One Is Right For You

You need to come up with some cash, fast. Maybe you have a leaky roof that desperately needs fixing or you need help paying for your kid's first semester of college. But where do you turn?If you're

Read More

These Pandemic Related Housing And Design Trends Are Not Going Away

Home trends come and go, but social distancing and staying at home have ushered in a new way of lifeā€”and some of those changes have spurred home trends that are likely to stick around well past

Read More