If you’ve been following US real estate market trends, it may come as no surprise that property sellers have been reaping a high return on investment for the past few years. And 2018 was actually the most profitable year to sell real estate property in 12 years.
The Average ROI for a US Property Seller
A recent report released by ATTOM Data Solutions shows that since purchase, the price of the average US real estate property enjoyed a gain of $61,000 in 2018. This amounts to an average return on investment of 32.6%.
Price gains in 2018 were up $11,000 from the previous year (27% ROI) and up $21,500 from 2016 (21.9% ROI). As the highest price gains were last witnessed in 2006, these profits hit a 12-year historic high.
Locations with the Highest Gains
The report examined 217 metropolitan statistical areas with a population exceeding 200,000. The locations with the highest gains were found in Western states along the coast. The cities where a property seller enjoyed the highest average return on investment in 2018 were:
San Jose, California: 108.8%
San Francisco, California: 78.6%
Seattle, Washington: 70.7%
Merced, California: 66.4%
Santa Rosa, California: 66.1%
The median property price in the US reached a historic high of $248,000, an increase of 5.5% from 2017. While real estate appreciation did slow down in 2018, a few cities saw major appreciation, with 69% of the studied markets hitting all-time high prices. These cities included Los Angeles, Dallas-Fort Worth, Houston, Atlanta, and Boston.
Cities with the largest gain in property price year-over-year were:
Mobile, Alabama: 21%
Flint, Michigan: 19%
San Jose, California: 18.9%
Atlantic City, New Jersey: 16.4%
Las Vegas, Nevada: 13.5%
Other major metropolitan cities that saw double-digit gains on property prices included:
Grand Rapids, Michigan: 10.6%
San Francisco, California: 10.3%
Columbus, Ohio: 10.1%
Atlanta, Georgia: 10.1%
Other Key 2018 Real Estate Market Trends
The same report on the US housing market found that:
- The average homeownership tenure reached record highs of 8.3 years in Q4, up from 7.95 years in Q4 2017 (16 out of 108 metro areas saw a decrease in property seller tenure)
- 27.8% of property buyers made an all-cash purchase (single-family homes and condos), down from 2017 but well-above the pre-recession average of 18.7% (2000-2007)
- The sales of distressed properties made up 12.4% of all single-family home and condo sales- an 11-year low (8 states saw an increase in sales of distressed properties)
- Institutional investor purchases made up 2.7% of all single-family home and condo sales, decreasing for the 5th year in a row
- FHA loan purchases made up 10.6% all single-family home and condo sales, the lowest since 2007, with Texas metro areas seeing the most FHA buyers
How Will Property Sellers Fair in 2019?
Price appreciation has already slowed down in 2019 and is predicted to continue decelerating throughout the year. So while a property seller won’t see as high of an ROI this year, a return to a balanced market will be welcomed by property buyers.
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