Home Seller Profits Hit Record Highs
Last week, the Case-Shiller home price index and FHFA house price index each showed home values are continuing to increase. In addition to home price appreciation, homeowners are occupying their homes longer. The average homeowner occupancy time of a home sold in Q2 2017 was eight years compared to just four years in the mid-2000s. Homebuilders are facing challenges as well with rising costs of construction materials and labor shortages. These combined factors have created the most profitable seller’s market in over a decade.
According to ATTOM Data Solutions, homeowners who sold in Q2 2017 saw an average profit of $51,000 for a 26% return. The most profitable metros included San Jose, CA and San Francisco, CA, followed by Seattle, WA, Modesto, CA, and Denver, CO. The Pacific Northwest and Western regions have been leading home price appreciation as well. In May, the Case-Shiller index reported the strongest gains in Seattle, Portland, and Denver. The Pacific region also led increases for the FHFA house price index.
Home values are expected to continue to climb as demand outpaces supply. According to the National Association of Realtors’ (NAR) existing home sales report total “for sale” inventory is down 7.1% from one year ago, and at today’s pace, it would take 4.3 months to exhaust all supply. The average time on the market is down to 28 days from last year’s 34 days. Buyers are acting fast.
"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," said Daren Blomquist, senior vice president at ATTOM Data Solutions.
Sources: CNBC, CNBC, MarketWatch