search

The Real Deal Logo

Trending

Rent board’s 4% hike will “plunge” buildings into distress: landlordsRent board’s 4% hike will “plunge” buildings into distress: landlordsH-E-B snags 21 acres in Celina, hinting at development boomH-E-B snags 21 acres in Celina, hinting at development boomHGTV’s “Mr. Flip It” gets four years in jail for $10M fraudHGTV’s “Mr. Flip It” gets four years in jail for $10M fraudSL Green, Vornado kick in $100M to extend 280 Park loanSL Green, Vornado kick in $100M to extend 280 Park loan
Residential
New York

Jump in homeseller profit margin hits post-recession high

Return on investment fueled by surging housing market

Jump in homeseller profit margin hits post-recession high
Happy home sellers (iStock)

Those selling their home in the midst of one of the hottest housing markets in recent memory are reaping record rewards.

Profit margins on median-priced single-family homes and condos hit 47.6 percent in the third quarter, the best since the Great Recession, according to the U.S. Home Sales Report released by ATTOM. The return on investment was 42 percent the previous quarter and 34.5 percent last year, marking the greatest annual jump since 2008.

The typical home sale generated $100,178 in profit, up from $88,800 in the second quarter and $69,000 in the third quarter of 2020.

Unsurprisingly, the hot housing market is the reason behind the high profit margins. The national median home price hit $310,500 last quarter, a record for the country. It was a 3.5 percent rise from the second quarter and 15.9 percent from last year.

According to ATTOM, the median home price grew year-over-year in 93 percent of measured metropolitan areas, while profit margins grew 86 percent.

Sign Up for the undefined Newsletter

“The third quarter of this year marked another period in a banner year for a housing market boom that’s steaming ahead through its 10th year,” said Todd Teta, ATTOM’s chief product officer.

The biggest annual profit margin increase came in Boise City, Idaho, where profit margins soared from 61.4 percent in the third quarter of 2020 to 130.3 percent in the same period of 2021. The city’s median home prices rose 28.3 percent year-over-year, ranking fourth in the nation and explaining the huge profit margin gain.

Sellers in Salem, Oregon took the biggest hit, seeing profit margins decline from 75.6 percent to 48.3 percent year-over-year. Los Angeles was among those seeing a decline, with profit margins down 54.3 percent to 44.5 percent year-over-year.

The ATTOM report also looked at homeownership tenure, finding the average ownership for sellers in the third quarter to be 6.31 years. While that’s essentially on par with the previous quarter, it’s down from 7.85 years last year.

While individuals are moving out at a faster rate, institutional investors are moving in quicker as well. The group made up 7.3 percent of single-family home purchases and condo sales in the third quarter, the highest percentage since 2014. Arizona had the most institutional investor sales with 17.4 percent of all sales.

Read more

Tags
Condo MarketHousing Market