Home owners selling on the West Coast of the United States are experiencing the biggest gains with property selling for an average of 54% more than they paid, a new analysis shows.
Those in San Jose, for example, sold their homes for a median gain of $296,000 and the location is seeing the fastest home value appreciation and the biggest declines in inventory, according to the research from real estate firm Zillow.
The research also shows that nationally sellers made about $39,000 after owning their homes for eight and a half years, a profit of about 21%.
It explains that a short supply of homes for sale has kept upward pressure on home prices, especially in markets where available homes are hardest to find. The profits, while welcome news for home sellers who are able to cash in on higher home prices, also demonstrate how difficult the market is for buyers.
The research found that it is increasingly common for homes to sell for more than the listed price. Indeed, in 2017 nearly a quarter of all homes sold for more than the asking price, up from 18% in 2012.
‘In a housing market that’s been plagued by low inventory and increasing demand, homeowners in the nation’s hottest markets have been able to cash in when they sell their homes,’ said Zillow senior economist Aaron Terrazas.
‘A home is typically the biggest investment someone makes, and it’s paid off for long time owners in many markets across the country. Today’s typical seller bought in 2010, just before the national housing market bottomed out in 2012. Of course, these sellers typically are buyers as well, but the profits from the sale of their former home give them an advantage over first time buyers who may be coming in with smaller down payments,’ he explained.
Nashville sellers sold their homes for a median of 34% more than they paid for it, the fifth highest percent gain among the markets Zillow analysed. They made these profits faster than markets where home sellers saw larger returns. Sellers in markets that saw bigger gains than Nashville sellers had owned their homes for at least a year longer before selling.
The research also found that most sellers, some 71%, are simultaneously trying to buy their next home. In 25 of the markets analysed, the profits sellers made are not enough for a 20% down payment on the median home in that same area. Sellers only made enough to cover a down payment in places where they saw the biggest percent gains on the sale.
