In this hot housing market, home sellers are racking up bigger profits on their homes than they have in a decade. Fast-rising home prices, coupled with homeowners staying put longer than usual are driving the trend.
The average tenure of a homeowner who sold in the second quarter of this year came in at just over eight years, the longest since the year 2000, when ATTOM Data Solutions began tracking the metric. During the last housing boom, in the mid-2000s, the average homeownership tenure was around four years.
Home values recently hit a record high, according to various surveys, and they continue to climb, as demand easily outpaces the supply of homes for sale. Add price gains to increased tenure, and home sellers are now seeing the greatest returns in 10 years. For those who sold in the second quarter of this year, they saw an average profit of $51,000, a 26 percent return.
Regionally, sellers saw the biggest profits in San Jose, California, with 75 percent; San Francisco with 65 percent; Seattle with 63 percent; Modesto, California, with 62 percent; and Denver with 62 percent.
It begs the question, if profits are high and homeowners have been stagnant, why don't more people decide to move?
"While it's the most profitable time to sell in a decade, it's also extremely difficult to find another home to purchase, which is helping to keep homeowners in their homes longer before selling," said Daren Blomquist, senior vice president at Attom Data Solutions. "And the market is becoming even more competitive, with the share of cash buyers in the second quarter increasing annually for the first time in four years."
Cash sales accounted for close to 29 percent of all single-family and condo sales in the second quarter, up from 27 percent during the same period in 2016.
As with everything in real estate, local market dynamics affect that share. Among major metropolitan areas with a population of at least 1 million, those with the highest share of all-cash sales were Raleigh, North Carolina, at 57.4 percent; Miami with 46.2 percent; Detroit at 45.2 percent; Oklahoma City at 44.6 percent; and Tampa-St. Petersburg, Florida, at 43.2 percent.
Those markets see an outsized share of both investors and foreign buyers, and both of those cohorts tend to favor cash.
We're seeing fundamental drivers causing home values to climb: Zillow's Svenja Gudell