You’ve heard it all before: It’s a home seller’s market out there. Need proof? In the second quarter of 2017, sellers raked in an additional average of $51,000 per sale over what they originally paid for their abodes.
That’s the highest returns the residential housing market has seen in a decade, according to a recent report from real estate information firm ATTOM Data Solutions. The sale price is about 26% more than owners originally spent on the property, the study showed. The last time it was this high was in early 2007, when sellers pocketed an average $57,000.
Break out the bubbly, home sellers!
ATTOM looked at recorded sales deeds, foreclosure filings, and loan data to compile the report.
The biggest profits were in places where prices are the highest. Sellers made returns of about 75% in Silicon Valley’s San Jose, CA; 65% in San Francisco; 63% in Seattle; 62% in Modesto, CA; and 62% in Denver. This was based on metros with at least 1,000 home sales and sales data were available going back to 2000.
“Those are areas that have seen the biggest gain in home prices during this recovery,” says Daren Blomquist, ATTOM’s senior vice president. “Modesto was a little bit of a surprise—it was one of the epicenters of the foreclosure crisis. [But] the halo effect of the Bay Area is rippling out to markets like Modesto and several others in central California and boosting home prices.”
Where are homeowners staying the longest—and leaving the fastest?
Despite—or perhaps because of—the high prices, homeowners stayed an average 8.05 years in their abodes nationally That’s the longest it’s been since the start of the survey, in 2000. And it’s because homeowners, while they might have no trouble selling their current property, still need to buy a new property.
“It’s not so easy to find a new home to purchase,” Blomquist says. “There’s not a lot of homes on the market to buy.”
Homeowners stayed the longest in their places in Boston, at 11.91 years; Hartford, CT, at 11.9 years; Providence, RI, at 10.28 years; San Francisco, at 9.7 years; and San Jose, at 9.71 years. ATTOM looked only at metros with at least 1 million residents for this list.
But in some other parts of the U.S., people seemed eager to pull up stakes and leave. The amount of time homeowners stayed in their homes dropped in certain high-profile metros, including Chicago; Dallas; Philadelphia; Washington, DC; and Detroit.
Where can investors—and everyone else—find real estate bargains?
In today’s soaring housing market, sales of distressed properties such as foreclosures, short sales, and bank-owned sales have dropped to the lowest levels since the third quarter of 2007. They made up only about 13.4% of all condo and single-family home sales in the second quarter.
“Rising home equity lifts all boats,” says Blomquist. “It allows more homeowners to avoid foreclosure. They have enough equity to sell or potentially refinance and lower their payments.”
The greatest percentage of distressed properties were in Atlantic City, NJ, at 40.2% of all home sales; Canton, OH, at 31%; Columbus, GA, at 27.8%; Trenton, NJ, at 27.7%; and Akron, OH, at 27.5%. ATTOM looked at metros with at least 200,000 residents and a minimum of 100 distressed sales to compile the list.
Atlantic City’s top placement on the foreclosure list is partly due to the area’s high unemployment rate—about 7.7% as of May. It was 4.4% nationally that month, according to the U.S. Bureau of Labor Statistics.
“We’re no longer in the paradigm where it’s toxic loans that are primarily causing foreclosures,” Blomquist says. “Job loss and wage loss is driving foreclosures today.”
The lack of distressed properties is pushing investors seeking a deal to set their sights on more far-flung markets to buy into.
“They’re moving to smaller, more off-the-beaten-path markets that are lower-priced still,” Blomquist says. Plus, “there’s less competition from other investors.”
Article provided by: www.REALTOR.com