Home sellers in today’s market are realizing some of the biggest profits in a decade, and it just isn’t a result of higher prices. Agents are finding that the typical tenure of a homeowner putting their property on the market during the second quarter was a little more than eight years.
According to a CNBC report, profits are rising.
ATTOM Data Solutions data indicates tenure today is the longest since 2000, when it first started tracking that statistic. In fact, during the last housing boom, tenure came in at around four years. As a result, quickly increasing prices paired with homeowners who have stayed in their homes are driving higher profits.
Homeowners who sold their properties during the second quarter of 2017 received an average profit of $51,000, a 26 percent return, according to Attom Data Solutions. The biggest profits were received in San Jose, Calif. (75 percent), San Francisco (65 percent) and Seattle (63 percent). This was among 118 metro areas with at least 1,000 home sales recorded in Q2 2017 and previous sale data available, according to ATTOM.
With a tight housing supply and rising prices, it begs the question of why more homeowners aren’t getting an agent and putting a “for sale” sign in the yard. Daren Blomquist, senior vice president at ATTOM Data Solutions, has a theory. He said potential sellers find themselves in a Catch-22.
“While it’s the most profitable time to sell in a decade, it’s also extremely difficult to find another home to purchase, which is helping to keep homeowners in their homes longer before selling. And the market is becoming even more competitive, with the share of cash buyers in the second quarter increasing annually for the first time in four years.”
Blomquist noted that cash sales accounted for close to 29 percent of all single-family and condo sales in the second quarter, up from 27 percent during the same period last year. He also noted that sellers who bought near the peak of the housing boom from 2004 to 2007 are seeing only small returns, if any at all, because many of those properties are still worth less than what the owners paid.
Part of the indecision on the part of owners is that they can’t find affordable homes to buy, noted Blomquist. The shortage of listings is pushing up prices, which is leading to higher profits for sellers.
“These are important pieces of the puzzle and explain why the market is behaving as it is.”