ATTOM: Home Sellers See Price Gains at Highest Rate Since 2007

U.S. home sellers realized an average price gain of $44,000 in the first quarter, the highest rate since 2007, reported ATTOM Data Solutions, Irvine, Calif.

The company’s 1Q 2017 U.S. Home Sales Report also noted average homeownership tenure receded from record highs in the fourth quarter to 7.97 years, but remained elevated; the distressed sales share fell on an annual basis for the 23rd consecutive quarter; and median home prices topped pre-recession peaks in 54 percent of markets surveyed.

ATTOM said the average price gain of $44,000 since purchase represented an average 24 percent return on the purchase price, the highest average price gain for home sellers in terms of both dollars and percent returns since Q3 2007.

Meanwhile the report also shows that homeowners who sold in the first quarter had owned an average of 7.97 years, down slightly from a record-high average homeownership tenure of 8.00 years in Q4 2016 but still up from 7.68 years in Q1 2016. Homeownership tenure averaged 4.26 years nationwide between Q1 2000 and Q3 2007, prior to the Great Recession.

“The first quarter of 2017 was the most profitable time to be a home seller in nearly a decade, and yet homeowners are continuing to stay put in their homes longer before selling,” said Daren Blomquist, senior vice president with ATTOM Data Solutions. “This counterintuitive combination is in part the result of the low inventory of move-up homes available for current homeowners, while also perpetuating the scarcity of starter homes available for first-time homebuyers.”

Among 97 metropolitan statistical areas with at least 1,000 home sales in the first quarter (and with previous sales price information available), those with the highest average price gain since purchase realized by home sellers during the quarter were San Jose, Calif. ($356,500 average price gain); San Francisco ($276,750 average price gain); Los Angeles ($187,000 average price gain); Honolulu ($161,110 average price gain); and Oxnard-Thousand Oaks-Ventura, Calif. ($160,000 average price gain).

“There are some early signs this inventory logjam may be loosening up in some markets, with the average homeownership tenure down from a year ago in nine of the 66 markets we analyzed, including Memphis, Dallas, Boston, Portland and Tampa,” Blomquist added. “Sky-high potential price gains may be finally prompting more homeowners to sell.”

Metro areas with the highest percent return on the previous purchase price were San Jose (71 percent average ROI); San Francisco (65 percent); Seattle (56 percent); Portland, Ore. (52 percent); and Modesto, Calif. (51 percent).

Counter to the national trend, six markets saw first quarter home sellers realizing a loss since the previous purchase on average: Baton Rouge, La. (10 percent average loss); Huntsville, Ala, (5 percent average loss); Milwaukee (3 percent average loss); Columbia, S.C. (3 percent average loss); Winston-Salem, N.C. (2 percent average loss); and Augusta, Ga. (1 percent average loss).

ATTOM said all-cash sales represented 30.0 percent of all single-family and condo sales in the first quarter, up from 29.1 percent in the previous quarter but down from 32.1 percent a year ago. It was was well below the peak of 44.7 percent in Q1 2011 but was still above the pre-recession average of 20.4 percent from Q1 2000 to Q3 2007.

Among 150 metropolitan statistical areas with a population of at least 200,000 and at least 100 all-cash sales in the first quarter, those with the highest share of cash sales were Salisbury, Md. (61.2 percent); Raleigh, N.C. (60.6 percent); Naples, Fla. (56.6 percent); Binghamton, N.Y. (54.3 percent); and Spartanburg, S.C. (53.3 percent). Fifty-one metro areas (34 percent) posted year over year increases.

Other report findings:

–Total distressed sales accounted for 16.9 percent of all single family home and condo sales in the first quarter, up from 15.5 percent in the fourth quarter but still down from 20.3 percent of sales a year ago, marking the 23rd consecutive quarter with an annual decrease in share of distressed sales.

–Among 130 metropolitan statistical areas with a population of at least 200,000 and at least 100 total distressed sales in the first quarter, those with the highest share of distressed sales were Atlantic City, N.J. (42.7 percent); Rockford, Ill. (34.3 percent); Trenton, N.J. (30.7 percent); Indianapolis (30.7 percent); and Philadelphia (30.7 percent).

–The median home sales price nationwide was $225,000 in the first quarter, up 2 percent from the previous quarter and up 13 percent from a year ago to a new post-recession high, although still 1 percent below the pre-recession peak of $227,000 in Q3 2005.

–Six of 95 markets analyzed (6 percent) hit new price peaks in the first quarter: Salem, Ore.; Seattle; Greeley, Colo.; Boise, Idaho; Fort Collins, Colo.; and Provo, Utah.

–The share of single-family home and condo sales sold to institutional investors (entities buying at least 10 properties in a calendar year) dropped to 1.7 percent in the first quarter, down from 3.4 percent in the previous quarter and down from 2.8 percent a year ago to the lowest level as far back as data is available, to Q1 2000.

–Sales to FHA buyers (typically first-time homebuyers or other buyers with a low down payment) represented 14.5 percent of all single family home and condo sales in the first quarter, down from 15.1 percent in the previous quarter and down from 15.0 percent a year ago to the lowest level since Q1 2015.