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 US home sales report found that despite a market slowdown in the second half of last year, profits increased from 2021 to 2022 in 98% of the 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 since at least 2008.
Main highlights:
- The median home price rose 10% in 2022, reaching another all-time annual high of $330,000. Full-year median home price growth fell below the 17.6% nationwide increase in 2021. Typical home prices hit new highs in 97% of 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 urban areas with a population of 200,000 or more. Values increased by at least 10% in 85 of these metros (54%). Those with the largest 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 (+24.6%) +23.8%).
- The largest median price increases in metropolitan 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%).
- The profit margin on typical home sales improved in 90% metropolitan areas. That came as the 10% increase in sales prices nationwide surpassed the 5% increases that recent sellers had paid 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%).
- Other than Miami, the biggest ROI gains in urban 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 largest declines in ROI 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%).
- Excluding 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%).
Important takeaway:
ATTOM found that gross profit on median-priced home sales reached $100,000 in 50% of the 157 metropolitan areas. The Western region had 17 of the top 20 gross earnings, led by San Jose, Calif. ($621,000); San Francisco, California ($473,000); Seattle, Washington ($304,063); San Diego, California ($295,500) and Los Angeles, California ($272,500). The smallest gross profits were mainly in the South and Midwest, reflecting lower home prices in those areas than elsewhere. These regions had 19 of the 20 lowest earnings 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 quite 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 fallen on a monthly basis since mortgage rates doubled between January and October and are likely to fall further in many markets across the country in 2023, reducing profitability for home sellers.”
ATTOM also found that nationally, cash-only purchases accounted for 36.1%, or one in three, of single-family home and apartment sales in 2022. The latest percentage — the highest since 2013 — was up from 34.4% in 2021 and from 22.7% in 2020. Among the metropolitan 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, are investors—are in a position of competitive advantage in today’s higher interest rate environment and will continue to account for a larger-than-usual share of the market, at least until mortgage rates come back down a bit. With affordability an issue for many buyers – especially first-time buyers – it would not be a surprise to see the percentage of cash purchases actually increase by 2023,” added Sharga.
For the full report, which includes data on home sellers, lender-owned foreclosures and institutional investments, click here.
