ATTOM: Average U.S. Home Seller Profits Hit 12-Year High
ATTOM Data Solutions, Irvine, Calif., said home sellers in 2018 realized an average home price gain since purchase of $61,000, up from $50,000 last year and up from $39,500 two years ago in 2016 to the highest level since 2006.
The company’s Year-End 2018 U.S. Home Sales Report said the $61,000 average home seller profit represented an average 32.6 percent return on investment compared to the original purchase price, up from 27.0 percent last year and up from 21.9 percent in 2016 to the highest average home seller ROI since 2006.
“While 2018 was the most profitable time to sell a home in more than 12 years, those along the coasts, reaped the most gains. However, those are the same areas where homeowners are staying put longer,” said Todd Teta, chief product officer with ATTOM Data Solutions. “The economy is still going strong and home loan rates remain historically low.”
However, Teta warned of potential clouds on the horizon. “The effects of last year’s tax cuts are wearing off as limits on homeowner tax deductions are in place and mortgage rates are ticking up ever so slowly, so this could dampen the potential for home price gains in 2019,” he said.
ATTOM reported of 217 metropolitan statistical areas with a population greater than 200,000, highest returns on investment were almost exclusively in western states, with concentrations along areas of the west coast. Those with the highest average home seller ROI were San Jose, Calif. (108.8 percent); San Francisco (78.6 percent); Seattle (70.7 percent); Merced, Calif. (66.4 percent); and Santa Rosa, Calif. (66.1 percent).
“Home price growth in the Seattle area has started to soften, something that home buyers have been waiting for, and a trend that we can expect to continue in the coming year,” said Matthew Gardner, chief economist with Windermere Real Estate, covering the Seattle market. “Seattle is still benefitting from buyers moving here from more expensive markets, such as California, but the market cannot solely depend on this demographic. My forecast for 2019 is that it will be a year of movement back to balance, which is a very positive thing.”
ATTOM reported the U.S. median home price in 2018 rose to a record-high $248,000, up 5.5 percent from 2017. Annual home price appreciation in 2018 slowed slightly compared to the 7.1 percent in 2017.
Among 127 metropolitan statistical areas with a population of 200,000 or more, highest year-over-year increase in home prices occurred in Mobile, Ala. (21 percent); Flint, Mich. (19 percent); San Jose, Calif. (18.9 percent); Atlantic City, N.J. (16.4 percent) and Las Vegas (13.5 percent). Eighty-eight of the 127 metros (69 percent) reached record home price peaks in 2018, including Los Angeles, Dallas-Fort Worth, Houston, Atlanta and Boston.
Other report data:
–Homeowners who sold in the fourth quarter had owned their homes a record average of 8.30 years, up from 8.13 years in the previous quarter and up from 7.95 years a year ago
–All-cash purchases accounted for 27.8 percent of single-family home and condo sales in 2018, unchanged from 2017 but down from its peak in 2011 at 38.4 percent. However, this is still well above the pre-recession average of 18.7 percent between 2000 and 2007.
–Distressed home sales accounted for 12.4 percent of all U.S. single family home and condo sales in 2018, down from 14.0 percent in 2017 and down from a peak of 38.6 percent in 2011.
–Institutional investors nationwide accounted for 2.7 percent of all single-family home and condo sales in 2018, down from 3.0 percent in 2017.
–Buyers using Federal Housing Administration loans accounted for 10.6 percent of all single-family home and condo purchases in 2018, down from 13.6 percent in 2017 to the lowest level since 2007.
