Second-Quarter Home Seller Profits Rise to 36%
ATTOM Data Solutions, Irvine, Calif., said its second-quarter 2020 U.S. Home Sales Report showed home sellers nationwide realized a gain of $75,971 on the typical sale, up from the $66,500 in the first quarter and from $65,250 a year ago.
The latest figure, based on median purchase and resale prices, marked yet another peak level of raw profits in the United States since the housing market began recovering from the Great Recession in 2012.
ATTOM said the typical $75,971 home-sale profit represented a 36.3 percent return on investment compared to the original purchase price, up from 34.5 percent in the first quarter and from 33.7 percent a year ago, to another post-Recession high. This comes as median home prices increased, year over year, in almost every market around the country with enough data to analyze. They rose by at least 5 percent in more than half the markets analyzed.
Todd Teta, Chief Product Officer with ATTOM, said prices and returns rose despite the economic damage caused by the worldwide coronavirus pandemic, which has put millions of people out of work in the United States and remains a threat to the stability of the housing market.
“The housing market across the United States pulled something of a high-wire act in the second quarter, surging forward despite the encroaching economic headwinds resulting from the Coronavirus pandemic,” Teta said. “Profit margins hit new records as prices kept climbing, with few indications that the impact of the virus would topple the market. No doubt, a lot of the ongoing prosperity resulted from gains seen before the pandemic started racing through the country in February and March. Indeed, there have been recent signs of prices flattening out or dropping across significant parts of the country, and the economic toll from the virus continues to be a major issue. But the second quarter results showed continuing strength in most parts of the nation.”
Key report findings:
–Typical profit margins rose year over year in 81 (78 percent) of 104 metropolitan statistical areas around the United States with sufficient data to analyze. Biggest annual increases in profit margins came in Spokane, Wash. (76 percent); Columbus, Ohio (up 47 percent); St. Louis (31.4 percent); Chattanooga, Tenn. (43.4 percent) and Indianapolis (41.9 percent). Profit margins dropped in 23 of the 104 metro areas anayzed.
–Despite the economic damage caused by the Coronavirus pandemic, median home prices in the second quarter of 2020 rose, year over year, in 97 of the 104 (or 93 percent) metropolitan statistical areas analyzed in the report. The average increase in the median home price from the second quarter of 2019 to the second quarter of 2020 was about 6 percent.
–Homeowners who sold in the second quarter had owned their homes an average of 7.95 years, up slightly from 7.85 years in the previous quarter and virtually same as the peak of 7.96 years in fourth quarter 2019.
–Nationwide, all-cash purchases accounted for 23.4 percent of single-family home and condo sales in the second quarter, down from 26.6 percent in the first quarter and from 24.4 percent a year ago, to the lowest level since third quarter 2007.
–Distressed home sales — including bank-owned (REO) sales, third-party foreclosure auction sales and short sales — accounted for 8 percent of all U.S. single-family home and condo sales in the second quarter, down from 9.7 percent in the prior quarter and from 10.9 percent a year earlier. The latest figure marked the lowest point since third quarter 2006 and is less than one-fifth of the peak level of 45.2 percent in first quarter 2009.
–Institutional investors nationwide accounted for 1.4 percent of all single-family home and condo sales in the second quarter, down from 2.2 percent in the first quarter to another new low point since at least 2000.
