U.S. home sellers made a pretty penny in 2021, with the nationwide realized profit growing by 45% year-over-year, according to a new analysis published by real estate data vendor ATTOM this week.
Per ATTOM’s year-end home sales report, on average home sellers raked in a profit of $94,092 on a typical home sale last year, up from $64,931 in 2020.
For comparison sake, in 2019 a home seller’s realized profit averaged out to about $55,000, the report said.
ATTOM noted that rising home prices and profits were driven primarily by a combination of historically low interest rates and a desire by many households to trade congested virus-prone areas for the perceived safety and wider spaces of a single-family home.
(The national median home price also grew by 16.9% in 2021 to $301,000—an annual record, the report added.)
“As [home buyers] chased a tight supply of homes for sale, prices spiked and so did seller profits,” ATTOM said.
Potential borrowers who’ve been priced out of the housing market need to be able to compete with an increasingly growing share of cash buyers and investors who are beating them in bidding wars.
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Furthermore, the analysis found that the $94,092 profit on the median-priced home sale represented a 45% return on investment compared to the original purchase price, up from 34% in 2020.
“What a year 2021 was for home sellers and the housing market all around the U.S. Prices went through the roof, kicking profits and profit margins up at a pace not seen for at least a decade,” said Todd Teta, chief product officer at ATTOM. “All that happened as the virus pandemic raged on, which actually helped drive the increases instead of stifle them.”
The report added that despite signs that prices could flatten out in 2022 due to declining affordability, lower investor profits and rising foreclosure activity, ATTOM thinks that the current imbalance in demand and supply means that there is room for additional price gains.
Additionally, the report found that sellers in western states reaped the highest profits in 2021.
States with the highest return on investments were Boise, ID (121.8 % return on investment); Spokane, WA (86.5 %); Bremerton, WA (82.7%); Prescott, AZ (81.2%) and Salem, OR (81.2%).
Meanwhile, states with the biggest year-over-year increases in median home prices were Worcester, MA (up 39.6%); Barnstable, MA (up 39.2%); Boston, MA (up 28.8%); Boise, ID (up 27.2%) and Phoenix, AZ (up 26%), the report said.