Home seller profits are soaring as home prices set new records in the pandemic. Home sellers nationwide in 2020 saw a home-price gain of $68,843 on the average sale—that is up from $48,500 two years prior, according to new research from ATTOM Data Solutions, a real estate research firm. Seller profits increased in more than 90% of the housing markets tracked, too.
Home seller equity for single-family homes and condos represented a 34.7% return on investment compared to the original purchase price, marking the highest gain since 2006, researchers note.
“Last year marked a unique year in the history of home prices and profits in the United States,” says Todd Teta, chief product officer at ATTOM Data Solutions. “A once-in-a-century health crisis tore through much of the nation’s economy but seemed to have the opposite effect on the housing market. Demand remained strong as people who could afford the space and relative safety of single-family homes did just that, aided by super-low mortgage rates and a strong stock market. But they went after a narrowing supply of housing stock, so prices soared and so did seller profits.”
Among the 132 metro areas tracked, researchers found that the Western states tended to see the highest returns on investment at home sale. The top 10 metro areas with the highest ROIs on typical home sales were led by San Jose, Calif. (87.3% return on investment); Seattle (72.1%); Salem, Ore. (69.6%); Spokane, Wash. (69.2%); and San Francisco (68.2%).
Overall, homeowners who sold in the fourth quarter of 2020 also tended to own their homes longer than in the past. Homeownership tenure averaged 8.33 years in 2020, up from 7.96 years in the fourth quarter of 2019. The latest homeownership tenure is the longest since at least the first quarter of 2000, when ATTOM Solutions started tracking such data.
By Realtor Magazine