ATTOM’s 2021 year-end housing market report revealed that it was far from a typical year. The company noted that a number of recent or unprecedented highs and lows have been established, including homeowner tenure, institutional investment and home seller return on investment (ROI).
Homeowners who sold their homes in 2021 made a median profit of $94,092 according to data released by ATTOM. It was a gain of 45.3%, up from $64,931 and 33.6% in 2020. Profit, based on median buy and sell prices, was the highest level of profitability since at least 2008, when ATTOM started tracking the data. Profits rose in 90% of the 173 metropolitan real estate markets with enough data to analyze.
Gross profit and return on investment improved nationwide for 10 consecutive years, but the ROI gain from 2020 to 2021 — up nearly 12 percentage points — was the biggest year-over-year increase since 2013. The rise in profitability should come as no surprise. The national median home price gained 17% in 2021 to $301.00, also a yearly high.
ATTOM said there were a few signs at the end of last year that prices could flatten in 2022, including declining affordability, declining investor profits and increasing foreclosures. Added to this is rising inflation and likely increases in mortgage rates this year. The report adds that the current supply and demand imbalance suggests there is room for at least some further price gains.
“What a year 2021 has been for home sellers and the housing market across the United States. Prices have exploded, driving up profits and profit margins at a pace not seen in at least a decade. This all happened as the virus pandemic raged on, which actually helped drive the increases instead of stifling them,” said Todd Teta, chief product officer at ATTOM. “Households that escaped pandemic job losses have plunged in the market, largely in response to the crisis. And the growing demand has led to the market boom. Undoubtedly, there are warning signs that the surge could slow down this year. But 2021 will go down as one of the best years for sellers and one of the toughest for buyers.
ROI was the highest between metropolitan areas on the west coast. Boise, Idaho led the way with a 121.8% return on investment. Spokane and Bremerton Washington followed with 86.5 and 82.7 percent. All but four of the 173 metropolitan areas studied by ATTOM saw median prices increase in 2021 and 124 saw them increase by 10% or more. The four where prices fell were Gulfport, Mississippi (down 4.9%); Peoria, Ill. (-1.8%); Beaumont, TX (-1.4%); and Kansas City, Missouri (-0.7%).
Homeowners who sold in the fourth quarter of last year had owned their home on average for 6.14 years. This was down from 6.34 years in Q3 2021 and 8.03 years in Q4 2020. This was the shortest average tenure since Q1 2012. Seller occupancy times declined year over year in 102, or 95%, of the 107 metro areas with a population of at least 200,000 and sufficient data.
Another anomaly in 2021 was the percentage of full cash sales. ATTOM said nearly one in three transactions during the year, 30.3%, were all cash, the highest level since 2015 and significantly higher than the 22.8% and 25% of those sales in 2020 and 2019. The highest level in ATTOM’s records was 38.5%. in 2011 and 2012, the two years following the peak of the foreclosure crisis.
Institutional investors continue to acquire residential properties, representing 6.9% sales of single-family homes and condos. It was the highest level since 2013 and was up from 2.7% in 2020.
FHA funding fell to its the lowest level since 2007. Only one transaction out of 12 single-family homes and condos, 8.4%, involved these loans. This figure was down from 11.9% in 2020 and 12% in 2019.