Home-Seller Profits Rose in 2022, Despite Market Slowdown

Home-Seller Profits Rose in 2022, Despite Market Slowdown

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Home sellers nationwide realized a profit of $112,000 on the typical sale in 2022, up 21% from $92,500 in 2021 and up 78% from $63,000 two years ago, according to a new report from ATTOM.

ATTOM’s Year-End 2022 U.S. Home Sales Report found that despite a market slowdown in the second half of last year, profits rose from 2021 to 2022 in 98% of housing markets with enough data to analyze. The latest nationwide profit figure, based on median purchase and resale prices, marked the highest level since at least 2008.

The report also found that the $112,000 profit on median-priced home sales represented a 51.4% return on investment compared to the original purchase price, up from 44.6% last year and from 32.8% in 2020. The latest profit margin also represented a high point since at least 2008.

Key highlights:

  • The median home price increased 10% in 2022, hitting another all-time annual high of $330,000. The full-year median home-price appreciation fell below the 17.6% nationwide gain in 2021. Typical home prices reached new peaks in 97% of the metros, including New York, New York; Los Angeles, California; Chicago, Illinois; and Dallas and Houston, Texas.
  • Median prices rose in all but two of the 157 metro areas with a population of 200,000 or more. Values shot up at least 10% in 85 of those metros (54%). Those with the biggest year-over-year increases were in Florida, led by Naples (+26.9%), Fort Myers (+26.7%), Lakeland (+25.7%), Port St. Lucie (+24.6%) and Ocala (+23.8%).
  • The largest median-price increases in metro areas with a population of at least 1 million came in Tampa, Florida (+21.9%); Raleigh, North Carolina (+17.9%); Austin, Texas (+17.9%); Orlando, Florida (+17.7%) and Tucson, Arizona (+17.2%).
  • Profit margins on typical home sales improved in 90% metro areas. That happened as the 10% jump in sale prices nationwide surpassed the 5% increases recent sellers had been paying when they originally bought their homes.
  • Nine of the 10 largest increases in investment returns were in Florida, led by Fort Myers (up from 51% to 85.4%), Ocala, (up from 49.7% to 82.4%), Naples (up from 44.7% to 74.4%), Port St. Lucie (up from 62.8% to 84.8%) and Miami (up from 42.9% of 64.1%).
  • Aside from Miami, the largest ROI gains in metro areas with a population of at least 1 million were in Orlando, Florida (up from 42.2% to 62.2%); Tampa, Florida (up from 53.8% to 73.8%); Jacksonville, Florida (up from 43.7% to 58.4%) and Las Vegas, Nevada (up from 48.8% to 59.8%).
  • The biggest decreases in investment returns came in Salem, Oregon (down from 82.7% to 43.1%); Atlanta, Georgia (down from 43.9% to 36%); Boise, Idaho (down from 75.9% to 68.9%); Prescott, Arizona, (down from 82.7% to 75.9%) and Sacramento, California (down from 61% to 54.7%).
  • Aside from Atlanta and Sacramento, metro areas with a population of at least 1 million and declining profit margins in 2022 included Minneapolis, Minnesota (down from 43.8% to 40%); Los Angeles, California (down from 48.2% to 45.2%) and San Francisco, California (down from 75.2% to 72.8%).

Major takeaway:

ATTOM found that raw profits on median-priced home sales topped $100,000 in 50% of the 157 metro areas. The West region had 17 of the top 20 raw profits, led by San Jose, California ($621,000); San Francisco, California ($473,000); Seattle, Washington ($304,063); San Diego, California ($295,500) and Los Angeles, California ($272,500). The smallest raw profits were mainly in the South and Midwest, reflecting lower home prices in those areas than elsewhere. Those regions had 19 of the 20 lowest profits on typical sales, led by Columbus, Georgia ($19,000); Shreveport, Louisiana ($20,000); Beaumont, Texas ($22,991); Rockford, Illinois ($34,500) and Davenport, Iowa ($38,500).

“It seems pretty likely that home seller profits peaked for this cycle in 2022,” said Rick Sharga, executive vice president of market intelligence at ATTOM. “Median prices have declined on a monthly basis since mortgage rates doubled between January and October and are likely to decline further in many markets across the country in 2023, reducing profitability for home sellers.”

ATTOM also found that nationwide, all-cash purchases accounted for 36.1%, or one of every three single-family home and condo sales in 2022. The latest percentage – the highest since 2013 – was up from 34.4% in 2021 and from 22.7% in 2020. Among those metro areas with a population of at least 200,000 and sufficient cash-sales data, those where cash sales represented the largest share were Augusta, Georgia (72.1%); Columbus, Georgia (69%); Athens, Georgia (60.6%); Flint, Michigan (59.5%) and Gainesville, Georgia (58.9%).

“Cash buyers – many, but not all of whom are investors – are in a position of competitive advantage in today’s higher interest rate environment, and will continue to account for a higher-than-usual share of market at least until mortgage rates dip back down a bit. With affordability a problem for many buyers – especially first-time buyers – it wouldn’t be a surprise to see the percentage of cash purchases actually increase in 2023,” Sharga added.

For the full report, which includes data on home seller tenures, lender-owned foreclosure purchases, and institutional investing, click here.

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