Jan 28, 2021 - Economy

Home sellers reaped record profits in 2020

Data: ATTOM Data Solutions; Chart: Axios Visuals

People who sold a median-priced home or condo last year made a typical profit of $68,843, the highest figure since at least 2005, according to real estate data provider ATTOM Data Solutions.

Why it matters: While homeownership is still elusive for Americans on bottom income rungs, it's proving to be a slot machine jackpot for the "haves," whose properties have grown more attractive thanks to pandemic lifestyle changes.

Driving the news: An ATTOM report released today found that profits for home sellers shot up last year in more than 90% of U.S. housing markets — and the median home price increased 12.8% to an all-time high of $266,250.

  • The big cities with the loftiest price hikes were Milwaukee (up 15.3%), Memphis (15.1%), Phoenix (14.9%), Birmingham, Ala. (13.7%) and Seattle (12.9%).
  • Home prices reached new peaks in 97% of the metro areas ATTOM analyzed, including New York City, Los Angeles, Chicago, Dallas and Houston.
  • The places with the smallest price gains were Worcester, Mass. (up 1.9%), Harrisburg, Pa. (2%), Pittsburgh (3.3%) and Boston (3.5%).

"In the annals of history, there will be few years recorded as better for sellers and more challenging for buyers,” said Todd Teta, chief product officer at ATTOM.

Where it stands: While it's well known that the pandemic whipped the housing market into a frenzy — with rampant bidding wars and not enough inventory — what we didn't know was just how lucrative things were for sellers.

  • Profits for them were the highest since at least 2005, when ATTOM started keeping records.
  • The gain on a typical sale was $68,843, up from $53,700 in 2019 and $48,500 in 2018.
  • This gain represented a 34.7% return on investment compared with the original purchase price — up from 29.4% in 2019 and 27.2% in 2018.

Details: Homeownership tenure also hit a national record, with people who sold their homes in the fourth quarter of 2020 having owned their property an average of 8.33 years, up from 7.98 years in the previous quarter and 7.96 years in the fourth quarter of 2019.

  • Cash sales were down. All-cash purchases represented 23.5% of single-family home and condo sales in 2020, ATTOM said — the lowest level since 2007.
  • Distressed sales hit a 15-year low. Foreclosures and bank-owned sales represented 7.8% of the market — less than a quarter of the 2011 peak.

Of note: The National Association of Realtors reported similar trends last week, saying that existing-home sales reached 5.64 million in 2020, up 5.6% from 2019 "and the most since before the Great Recession."

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