The pandemic has not dampened home appreciation. In fact, high buyer demand is prompting home prices to surge. In the third quarter, the average home sale generated a gain of $85,000, up from $66,000 a year ago, according to data from real estate research firm ATTOM Data Solutions. That $85,000 translates to a nearly 39% return on investment compared to the original purchase price.
“Home prices and seller profits across the nation continue racking up new highs as the housing market remains relatively immune from the economic havoc caused by the coronavirus pandemic,” says Todd Teta, chief product officer at ATTOM Data Solutions. “It’s almost as if the housing market and the overall economy are operating in different worlds.” Record-low mortgage rates and declining inventory are prompting strong home prices and returns for home sellers, Teta adds.
ATTOM Data Solutions defines typical profit margins as the percent change between the median purchase and resale prices. The largest annual increase in profit margins occurred in the following metro areas in the third quarter, according to the report:
- St. Louis: margin up from 22.4% to 37.1%
- Columbus, Ohio: up from 37.1% to 51.6%
- Salem, Ore.: up from 60.6% to 73.9%
- Indianapolis: up from 32.7% to 46.0%
- Akron, Ohio: up from 20.7% to 33.7%
Overall, profit margins remained highest in Western markets. The largest profit margins nationwide were in:
- San Jose, Calif.: 89.0% return
- Salem, Ore.: 73.9%
- Seattle: 73.0%
- Spokane, Wash.: 70.3%
- Salt Lake City: 65.1%
Source: ATTOM Data Solutions
