Report: Seller profits hit new high in 2019

Rising home prices and longer homeownership tenure helped sellers in 2019 realize a new record high in profit from an average home sale, according to a recent report by the real estate data company ATTOM Data Solutions.

In its year-end U.S. Home Sales Report, ATTOM Data Solutions concluded that the typical home seller in 2019 gained $65,500 from the transaction. This was up from $58,100 in 2018 and $50,027 in 2017 and the highest average seller profit since 2006.

"The nation's housing boom kept roaring along in 2019 as prices hit a new record, returning ever-higher profits to home sellers and posing ever-greater challenges for buyers seeking bargains. In short, it was a great year to be a seller," said Todd Teta, chief product officer at ATTOM Data Solutions. "But there were signs that the market was losing some steam last year, as profits and profit margins increased at the slowest pace since 2011. While low mortgage rates are propping up prices, the declining progress suggests some uncertainty going into the 2020 buying season."

The median home price in the United States in 2019 rose 6.2 percent from the previous year to an all-time high of $258,000. Among 134 metropolitan statistical areas with a population of at least 200,000 and sufficient data, home prices hit new highs in 105 markets.

South Bend, Ind. had the most significant year-over-year median home price increase among these markets at 18.4 percent. This was followed by a median gain of 12.6 percent in Boise City, Idaho and a 10.9 percent gain in Spokane, Wash.

The average sale resulted in a 34 percent return on investment compared to the original purchase price. While this was up from 27.4 percent in 2017 and the highest average return on investment since 2006, it was also a gain of less than 3 percentage points compared to the average return on investment of 31.4 percent in 2018.

Among metropolitan statistical areas with a population greater than 200,000 and sufficient data, the highest returns on investment were concentrated on the West Coast. The typical seller realized an 82.8 percent return on investment in San Jose, Calif., a 72.8 percent return in San Francisco, and a 65.6 percent return in Seattle.

Homeowners who sold their property in the fourth quarter of 2019 had lived at the residence for an average of 8.21 years, up from 8.08 years in the third quarter and 7.95 years in the fourth quarter of 2018. This homeownership tenure was the lengthiest since the first quarter of 2000, the first period when data was available.

Homeowners had stayed put the longest in Connecticut, which held the top five spots for longest homeownership tenure among the 108 metropolitan statistical areas with a population of at least 200,000 and sufficient data. These included an average stay of 13.49 years in Norwich, 13.32 years in New Haven, 13.23 years in the Bridgeport-Stamford area, 12.33 years in Torrington, and 12.24 years in Hartford.

Homeownership tenure decreased in 45 percent of metro areas. The most significant reductions occurred in Colorado Springs, Colo. (down 9 percent) and Modesto, Calif. (down 7 percent).

Investors and cash buyers were less prominent in the housing market. Just over one-quarter of home purchases in 2019—25.3 percent—were made without financing, down from 27 percent in 2018 and 27.7 percent in 2017. However, all-cash purchases were still considerably higher than the pre-recession average of 18.7 percent between 2000 and 2007.

Among 166 metro areas with sufficient data and a population of 200,000 or more, all-cash purchases accounted for half of the year's sales in two markets. These were Macon, Ga. (51.1 percent) and Naples, Fla. (50.4 percent).

Just 2.9 percent of all single-family home and condominium sales in 2019 went to institutional investors, defined as entities who purchased at least 10 properties in the calendar year. This share was at its lowest since 2015, dropping from 3 percent in 2018.

Sales of distressed properties—including foreclosures, short sales, and bank-owned sales—hit their lowest point since 2006, accounting for 11.5 percent of single-family home and condominium sales in 2019. This share was down from 12.4 percent in 2018 and a high of 38.8 percent in 2011.

Distressed sales were more common in the Northeast and Mid-Atlantic regions, accounting for 20.1 percent of the year's sales in New Jersey, 19.5 percent in Connecticut, and 19.4 percent in Delaware. Among the 204 metro areas with a population of at least 200,000 and sufficient data, the markets with the highest share of distressed sales included Atlantic City, N.J. (26.9 percent), Columbus, Ga. (22.6 percent), Trenton, N.J. (22.1 percent), and Norwich, Conn. (21.6 percent). Portland, Me. had the lowest share of distressed sales at 3.3 percent.

Among cities with a population of at least 1 million, distressed sales made up the largest proportion of transactions in Baltimore (19.3 percent), Hartford (18.9 percent), and Philadelphia (18.1 percent). The share was smallest in San Jose (5.2 percent), Austin, Texas (5.7 percent), and Grand Rapids, Mich. (6.2 percent).


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