Seller profits, homeownership tenure dip slightly in Q1 2019

People selling their home at the start of the year had typically been living in the residence for less time and sold for a lower profit than sellers in the last quarter of 2018, according to the real estate analytics company ATTOM Data Solutions. However, homeownership tenure and profits were both up on an annual basis.

In its U.S. Home Sales Report for the first quarter of 2019, the company determined that homeowners who sold between January and March had owned their property for an average of 8.05 years. This was down from a record high of 8.17 years in the fourth quarter of 2018, but up from 7.75 years in the first quarter of 2018. The figure was also considerably above the average homeownership tenure of 4.21 years in the seven years prior to the Great Recession.

The average seller received a profit of $57,500 above their original purchase price, or a typical return on investment of 31.5 percent. This windfall was down from the average of $60,000 in the previous quarter, but up from $56,733 in the previous year.

"Home prices are still above pre-recession peaks in 59 percent of local markets and, as they buying season starts to kick into gear, the next few months may provide even more answers to the question of whether a lasso is indeed around the market or if the recent trend is a temporary bump in the ride," said Todd Teta, chief product officer at ATTOM Data Solutions.

Large cities in New England had the longest homeownership tenures in the nation. Among metro areas with a population of at least 1 million, Hartford had the longest homeownership tenure at 12.52 years, followed by Boston at 12.36 years and Providence at 11.15 years.

Twenty-three percent of the 108 metro areas included in the report had shorter homeownership tenures compared to the first quarter of 2018. These cities included Kansas City, Oklahoma City, Orlando, and Tucson.

California cities accounted for three of the five metro areas with the largest return on investment in the first quarter of 2019. The typical sale was 84.1 percent higher in San Jose, 70.9 percent higher in San Francisco, and 59.7 percent higher in Modesto. Other U.S. cities with high returns included Seattle (63.1 percent) and Salt Lake City (56.5 percent).

Median home prices were above pre-recession peaks in 59 percent of markets, particularly in Colorado and Texas. In the former state, Greeley had the highest price increase above pre-recession peaks at 79 percent, followed by Denver at 68 percent and Fort Collins at 67 percent. In Texas, prices were 62 percent above pre-recession peaks in Austin and 58 percent higher in Dallas.

In the metro areas where median prices were still below pre-recession highs, they were most depressed in York-Hanover, Pa. The median home sale in this market was 56 percent lower than the pre-recession peak. The markets with the next most pronounced below-peak prices were in New Jersey, with the median home selling for 35 percent below peak in Trenton and 32 percent lower in Atlantic City.

In Connecticut, median home prices were 17 percent below the pre-recession peak in Hartford. They were also 28 percent lower in Bridgeport-Stamford-Norwalk and 22 percent lower in Stamford.

All-cash and investment activity was down in the first quarter of the year. Twenty-eight percent of single-family home and condominium sales were made without financing, up slightly from 27.7 percent in the fourth quarter of 2018 but down from 28.9 percent in the first quarter of 2018.

Among cities with a population of at least 1 million, all-cash sales were most common in Florida. A total of 44.6 percent of sales in Miami and 40.7 percent in Tampa-St. Petersburg went to buyers who didn't need a mortgage.

Institutional investors, defined as entities buying at least 10 properties in a calendar year, made up just 1.8 percent of the quarter's sales – down from 3.7 percent in the previous quarter and 2.2 percent in the previous year. Investor activity was most pronounced in the South, with institutional investors making up 7.9 percent of the quarter's sales in Columbia, S.C.; 7.4 percent of the sales in Atlanta; and 5.6 percent of the sales in Charlotte, N.C.

A total of 14.2 percent of single-family home and condominium transactions in the first quarter of 2019 were distressed sales, including foreclosures and short sales. This share was up from 12.9 percent in the previous quarter but down from 15.2 percent in the previous year.

Among the metro areas in the report with a population of at least 200,000, distressed sales were most prevalent in Atlantic City (33.1 percent), Trenton (28 percent), and Rockford, Ill. (27.3 percent). The most pronounced year-over-year increases in the share of distressed sales included San Antonio (up 22.2 percent), Salt Lake City (up 20.6 percent), and New Orleans (up 11.8 percent).

Buyers using loans through the Federal Housing Administration, which typically include first-timers and others using a low down payment, accounted for 10.9 percent of single-family home and condominium sales during the month. This was up slightly from 10.8 percent in the fourth quarter of 2018 but down from 11.8 percent in the first quarter of 2018.

Among larger metro areas, the cities with the highest share of FHA buyers included Indianapolis (18.5 percent), Riverside, Calif. (18 percent), Houston (17.3 percent), Hartford, and Providence (both 16.2 percent).

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