Home sellers’ profit margin jump to peak after recession

Happy Home Sellers (iStock)

Those who sell their homes in the middle of one of the hottest housing markets in recent memory are reaping record rewards.

Profit margins on single-family homes and median-priced condos hit 47.6% in the third quarter, the best since the Great Recession, according to the US Home Sales Report published by ATTOM. Return on investment was 42% in the previous quarter and 34.5% last year, marking the biggest annual jump since 2008.

The sale of a typical home generated a profit of $ 100,178, compared to $ 88,800 in the second quarter and $ 69,000 in the third quarter of 2020.

Not surprisingly, the hot housing market is the reason for the high profit margins. The national median home price hit $ 310,500 in the last quarter, a record for the country. This is an increase of 3.5% from the second quarter and 15.9% from last year.

According to ATTOM, the median home price increased year over year in 93% of the metropolitan areas measured, while profit margins increased 86%.

“The third quarter of this year marked another period in a record year for a housing market boom that continues through its 10th year,” said Todd Teta, product director at ATTOM.

The largest increase in annual profit margin came in Boise City, Idaho, where profit margins rose from 61.4% in the third quarter of 2020 to 130.3% in the same period of 2021. Median home prices in the city rose 28.3% year-over-year. ranking fourth in the country and explaining the huge profit margin gain.

Salespeople in Salem, Oregon were the hardest hit, with profit margins falling from 75.6% to 48.3% year-over-year. Los Angeles was among those to see a decline, with profit margins falling from 54.3% to 44.5% year-over-year.

The ATTOM report also looked at the tenure of the property, concluding that the average third-quarter vendor ownership was 6.31 years. While essentially on par with the previous quarter, it’s down from 7.85 years last year.

While individuals are moving at a faster pace, institutional investors are also moving faster. The group accounted for 7.3% of single-family home purchases and condo sales in the third quarter, the highest percentage since 2014. Arizona recorded the most institutional investor sales with 17.4% of all sales.

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