2019 has been a bumper year for home sellers, with average profits on a home sale peaking at $ 65,500 in 13 years, according to the recently released report U.S. Home Sales Report 2019 by ATTOM Data Solutions.
That income, based on data from bills of sale recorded across the United States, compared the purchase price of Americans’ homes to what they sold last year. In 2019, the median home selling price hit $ 258,000, resulting in a 34% return on investment for home sellers. This is the highest return on investment since 2006.
Todd Teta, ATTOM Product Manager, attributes these high profits to door-to-door sellers to several market factors: a strong economy, rising wages, stock Exchange and historically low mortgage interest rates. In 2019, interest rates fell by one percentage point and hovered around 3.6%.
“Put simply, the economic conditions for a continued increase in prices and therefore profits have remained in place and have even improved,” Teta told 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 profits from home sales
Not surprisingly, many of the subways with the highest profits from home sellers were in California. According to the ATTOM report, these cities recorded the highest return on investment for home sellers in 2019:
- San José, California (82.8%)
- San Francisco, California (72.8%)
- Seattle, Washington State (65.6%)
- Merced, California (63.2%)
- Salem, OR (62.1%)
These top four cities were also at the top of the list in 2018.
Should I sell my house now?
These dizzying returns on investment can make homeowners wonder if they should sell their home now to do a murder, unless they can even see bigger benefits if they keep their property even longer. But that largely depends on the persistence of the factors that kept the market strong last year, Teta says. So far, there is no sign that economic conditions will worsen, he adds.
“Profits are expected to remain strong and possibly set new records,” he said. “But if the economy slows, the stock market plunges, or interest rates rise, prices and profits 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 considering moving, now is the perfect time to sell,” says Ali Wolf, director of economic research at Meyers Research, in Costa Mesa, Calif.
This “sell now” call to action can be especially true if you live in a luxury home, as last year’s smallest profits were made in areas where homes were selling for $ 275,000 and up.
“We may see a slight slowdown in sales rates and an increase in time to market for luxury segments,” says Tim sullivan, Senior Managing Director at Meyers Research.
Currently, most of the country remains a seller’s market, especially in mid to lower priced markets, Teta says. In more expensive markets, however, it can 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 Now a Good Time to Buy a Home?
While homebuyers may be tempted to postpone buying a property until prices drop, trying to time the market like this 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 is always a good time to buy, says Sullivan.
“This permanence will generally survive changes in the market,” he says. However, “if there is uncertainty about a job or a location, waiting is probably the best solution. Or, if you’re looking to buy and return, you have to be careful because prices have risen dramatically over the past six years, ”he says.
In particular, house prices in the middle and lower ranges are expected to rise the most, so it may be wise for buyers in that price range to act now, Teta said. In high-end markets, waiting may make more sense, as price increases have been limited.
High house prices and low mortgage rates are likely to persist for some time. As such, it’s critical that homebuyers work out the numbers and figure out how much they can afford before they even start shopping at home.
“They need to assess how much of their income they want to spend on housing and see if what’s on the market matches their needs,” says Wolf.
“Of course, this all depends heavily on the factors supporting the market,” Teta adds. “If any of these go wrong, then obviously waiting would be the best decision for anyone in any market who doesn’t need to buy right away.”