2019 was a banner year for home sellers, with the average profit on a home sale hitting a 13-year high of $65,500, according to the recently released report. 2019 U.S. Home Sales Report by ATTOM Data Solutions.
This income, based on data from registered bills of sale in the United States, compared the price Americans bought their homes with what they sold last year. In 2019, the median home sale price reached $258,000, resulting in a 34% return on investment for home sellers. This is the highest return on investment since 2006.
Todd Tetachief product officer of ATTOM, attributes these strong home seller profits to several market factors: a strong economy, rising wages, stock market gains and, historically, low mortgage interest rates. In 2019, interest rates fell by one percentage point and hovered around 3.6%.
“Simply put, the economic conditions for a continued rise in prices – and therefore earnings – have remained in place and even improved,” Teta said. realtor.com®. “With more cash on hand and lower borrowing costs, buyers were apparently able to pay higher prices, which boosted sellers’ profits.”
Cities with the highest home sales profits
Not surprisingly, many of the metros with the highest home seller profits were in California. According to the ATTOM report, these cities saw the highest return on investment in 2019:
- San Jose, California (82.8%)
- San Francisco, California (72.8%)
- Seattle, Washington (65.6%)
- Merced, CA (63.2%)
- Salem, OR (62.1%)
These top four cities also topped the list in 2018.
Should I sell my house now?
These exorbitant returns on investment can have homeowners wondering if they should sell their home now for a kill, unless they can even see bigger profits if they keep their property even longer. But much of that depends on whether the factors that kept the market strong last year persist, Teta said. So far, there is no indication that economic conditions will deteriorate, he adds.
“Earnings are expected to remain strong and possibly reach new records,” he says. “But if the economy slows, the stock market dips, or interest rates rise, prices and earnings could easily flatten or fall.”
Once the market starts to slow down, it might be too late to sell and get the best price.
“If sellers are thinking of moving, now is the perfect time to sell,” says Ali Wolfdirector of economic research at Meyers Research, in Costa Mesa, California.
This “sell now” call to action may be especially true if you reside in a luxury home, since the smallest profits last year were in areas where homes were selling for $275,000 and above.
“We could see a slight slowdown in sell rates and an increase in time to market for luxury segments,” says Tim SullivanSenior Managing Director at Meyers Research.
Currently, most of the country remains a sellers market, especially in mid-to-low price markets, says Teta. In more expensive markets, however, it may move to a buyer’s market.
“If this is where you are, the latest trends suggest now is the time to sell,” says Teta.
Is it the right time to buy a house?
Although homebuyers may be tempted to put off buying a property until prices drop, trying to time the market in this way can get you in trouble. If you find the right house in the right place and plan to stay there for a while, then it’s still a good time to buy, says Sullivan.
“This permanence will generally outlast market changes,” he says. However, “if there is uncertainty about a job or location, waiting is probably the best course of action. Or, if one is looking to buy and return, be careful as prices have risen dramatically over the past six years,” he says.
In particular, home prices in the middle and low ranges are expected to rise the most, so it may be wise for buyers in that price range to act now, Teta says. In high-end markets, waiting may make more sense, since price increases have been limited.
High house prices and low mortgage rates will likely persist for some time. As such, it’s essential for homebuyers to crunch the numbers and understand how much they can afford before you even start home shopping.
“They have to weigh how much of their income they want to spend on housing and see if what’s on the market meets their needs,” says Wolf.
“Of course, all of this is highly dependent on the factors supporting the market,” adds Teta. “If one of those goes bad, then waiting would obviously be the best decision for anyone in any market who doesn’t need to buy right away.”
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