Thursday 23 January 2020

Home Seller Profits Go So High, You Have to Ask: Should You Sell Now?

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2019 was a stellar year for home sellers, with the average profits on a home sale reaching a 13-year high of $65,500, according to the recently released 2019 U.S. Home Sales Report by ATTOM Data Solutions.

These earnings—based on data from recorded sales deeds across the U.S.—compared the purchase price of Americans’ homes with what they sold for last year. In 2019, the median home sales price reached $258,000, resulting in a 34% return on investment for home sellers. That’s the highest ROI since 2006.

Todd Teta, ATTOM’s chief product officer, attributes these high 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 dropped a full percentage point and have hovered around 3.6%.

“Put simply, economic conditions for continued price—and therefore profit—run-ups remained in place and even got better,” Teta tells realtor.com®. “With more money available and reduced borrowing costs, buyers apparently were able to pay higher prices, which boosted seller profits.”

Cities with the highest home sale profits

Not surprisingly, many of the metros with the highest home seller profits were in California. According to the ATTOM report, these cities had the highest home seller ROI in 2019:

  • San Jose, CA (82.8%)
  • San Francisco, CA (72.8%)
  • Seattle, WA (65.6%)
  • Merced, CA (63.2%)
  • Salem, OR (62.1%)

These top four cities also topped the list in 2018.

Should I sell my home now?

These sky-high ROIs may have homeowners wondering whether they should sell their house now to make a killing—unless they could see even bigger profits if they hold on to their property even longer. But that largely depends on whether the factors that kept the market strong last year continue, Teta says. So far, there are no signs that economic conditions will worsen, he adds.

“Profits should remain strong and maybe hit new records,” he says. “But if the economy slows, the stock market dives, or interest rates go up, prices and profits could easily flatten out or decline.”

Once the market starts to slow, it could be too late to sell and get top dollar.

“If sellers are thinking about moving, now is a great time to sell,” says Ali Wolf, director of economic research at Meyers Research, in Costa Mesa, CA.

This “sell now” call to action may be particularly 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 more.

“We could see a slight slowdown in sales rates and increase in time on market for the luxury segments,” says Tim Sullivan, senior managing principal 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 may be shifting to a buyer’s market.

“If that’s where you’re located, the latest trends suggest that now’s the time to sell,” Teta says.

Is now a good time to buy a home?

While home buyers might be tempted to put off purchasing property until prices drop, trying to time the market like this can land you in trouble. If you find the right home in the right location and plan to stay there for a while, then it’s always a good time to buy, says Sullivan.

“That permanence will typically outlast market shifts,” he says. However, “if there is uncertainty about a job or a location, waiting is probably the best course. Or, if one is looking to buy and flip, care must be taken since prices have increased significantly in the last six years,” he says.

In particular, home prices in the middle and low ranges are expected to rise the most, so it may be a smart move for buyers in that price range to act now, Teta says. In higher-end markets, waiting may make more sense, since price increases have been limited.

High home prices and low mortgage rates will likely stick around for a while. As such, it’s essential that home buyers crunch the numbers and figure out how much they can afford before they even start home shopping.

“They need to weigh how much of their income they want to put toward housing and see if what’s on the market matches their needs,” says Wolf.

“Of course, all that hinges heavily on the factors propping up the market,” Teta adds. “If any of those goes bad, then waiting obviously would be the best move for anyone in any market who doesn’t need to buy right away.”

The post Home Seller Profits Go So High, You Have to Ask: Should You Sell Now? appeared first on Real Estate News & Insights | realtor.com®.



source https://www.realtor.com/news/trends/home-seller-profits-2019-hit-record-high/

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