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Home sellers were raking in the dough last year, earning the highest profits on their abodes in a dozen years.
Those who sold their residences in 2018 made an average profit of $61,000—and West Coasters reaped even higher returns, according to a recent report from real estate information firm ATTOM Data Solutions. That’s up 22% from the median $50,000 they made in 2017, and it represents an average 32.6% profit.
To come up with its findings, ATTOM compared the original purchase price of homes with what they sold for in 2018. The data come from recorded sales deeds, foreclosure filings, and loan information.
The biggest profits were in Silicon Valley’s San Jose, CA, at 108.8%; San Francisco, at 78.6%; Seattle, at 70.7%; Merced, CA, at 66.4%; and Santa Rosa, CA, which was devastated by wildfires in 2017, at 66.1%. The analysis included only metros with populations of 200,000 and up with sufficient home price data available.
Prices rose so high in some of these metropolitan areas (which include cities and the surrounding suburbs), they’re now seeing a wave of price reductions as sellers are forced to lower their expectations. That’s one of the strong indicators that the good times are likely to slow down this year, along with the rest of the real estate market.
“There are potential clouds on the horizon,” Todd Teta, ATTOM’s chief product officer, said in a statement. “The effects of last year’s tax cuts are wearing off as limits on homeowner tax deductions are in place and mortgage rates are ticking up ever so slowly, so this could dampen the potential for home price gains in 2019.”
In the past few months, more sellers seeking big paydays rushed to put their homes up for sale while prices were still at record highs. At the same time, many buyers were sidelined by those same high prices, rising mortgage rates, and tax changes. Others are simply waiting to see how the market will sort itself out before taking the plunge. So with more supply and less demand nationally, selling homes may not be quite so lucrative going forward.
But there are some markets bucking the trend. The Mobile, AL, metropolitan area saw the largest price increases, at 21%; followed by Flint, MI, known for its recent water crisis, at 19%; San Jose, at 18.9%, Atlantic City, NJ, at 16.4%; and Las Vegas, at 13.5%.
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