RALEIGH, N.C. (WGHP) – Despite a cooling market because mortgage rates have risen to fight inflation, home sellers in 2022 still had an amazing rate of return – and those in Raleigh were among the best.
The ATTOM U.S. Home Sales Report released today showed that sellers nationally saw a 21% higher average profit – up to $112,000 – from 2021 and 78% higher than in 2020.
The report, which provides a variety of data on sales and profits from states and metropolitan statistical areas, also revealed that profits rose year over year in 98% of the nation’s markets, the highest level in the United States since at least 2008.
The report said that among metro areas with a population of at least 1 million, Raleigh ranked second for the largest median-price increases, up 17.9%. Only Tampa (21.9%) ranked higher, and Raleigh was followed by Austin, Texas (up 17.9%), Orlando (17.7%) and Tucson, Arizona (17.2%).
“It seems pretty likely that home seller profits peaked for this cycle in 2022,” Rick Sharga, executive vice president of market intelligence at ATTOM, said in a release announcing the findings. “Median prices have declined on a monthly basis since mortgage rates doubled between January and October and are likely to decline further in many markets across the country in 2023, reducing profitability for home sellers.”
Raleigh also showed up among large metro areas in an analysis of lender-purchased foreclosures in 2022, reporting among the smallest shares, with 0.2% of sales. Chicago had the highest rate, and only Denver (0.2%), Tucson (0.3%), San Francisco (0.3%) and Colorado Springs, Colorado (0.3%), were lower.
You may recall that in December ATTOM reported that Metro Winston-Salem was one of the country’s hottest markets for home flipping – buying, updating and quickly selling a residence – during the third quarter of the year.
The only other mention of a city from North Carolina in this report was Charlotte, which ranked among qualifying markets with at least 200,000 population as having among the highest portions of institutional-investor transactions.
Charlotte recorded 16.8% of sales fell in that group, which ranked only behind Atlanta (19%), Memphis (18.4%) and Jacksonville, Florida (17.9%).
Mortgage rates have risen precipitously as the Fed has fought unexpectedly high post-pandemic inflation rates for the past two years. The average rate of a fixed-rate, 30-year mortgage in August 2020 was 2.98%. In October it was up to 7.08%, and at year’s end rates were about 6.42%.
ATTOM found that profits did increase at a slower pace than in 2021 and that the national median home value dipped 8% over the second half of last year.
Still, the headline of ATTOM’s report is pretty glowing and simple: Typical profits from sales rose nationally from 45% to 51%, and the median home sales price was up 10% to $300,000.
That $112,000 profit on median-priced home sales in 2022 represented a 51.4% return on investment compared to the original purchase price, up from 44.6% last year and from 32.8% in 2020. The latest profit margin also represented a high point since at least 2008.
Both raw profits and ROI have improved nationwide for 11 consecutive years, the report said, and the $300,000 price was another annual record.
The key data
The report included monstrous amounts of data, but here are some of the key points:
- Western and Southern states – particularly Florida – dominated among 157 metropolitan statistical areas with a population greater than 200,000 and sufficient sales data, reporting 14 of the 15 metro areas with the highest returns on investments. That was led by Hilo, Hawaii (100% return on investment), followed by Lake Havasu City-Kingman, Arizona (88.4%); Spokane, Washington (86.2%); Fort Myers, Florida (85.4%), and Port St. Lucie, Florida (84.8%).
- Values shot up at least 10% in 85 of those 157 metros (54%). That list was all Florida cities, led by Naples (median up 26.9%). Then came Fort Myers (up 26.7%); Lakeland (up 25.7%); Port St. Lucie (up 24.6%) and Ocala (up 23.8%).
- Typical home prices set records in 153 of the 157 metros analyzed, including New York, Los Angeles, Chicago, Dallas and Houston.
- Metro areas where median prices dropped or rose by the smallest amounts were Davenport, Iowa (down 2%); Shreveport, Louisiana (down 1.7%); Baltimore (up 2.7%); Pittsburgh (up 2.7%) and Toledo, Ohio (up 2.8%).
- Profit margins on typical home sales improved in 141 of the 157 metro areas with sufficient data to analyze. There was a 10% increase in sale prices nationwide in 2022.
- Nine of the 10 largest increases in investment returns were in Florida, led by Fort Myers (ROI up from 51% in 2021 to 85.4% in 2022) and Ocala (up from 49.7% to 82.4%).
- Aside from Miami, the largest ROI gains in metro areas with a population of at least 1 million were in Orlando (ROI up from 42.2% to 62.2%); Tampa (up from 53.8% to 73.8%); Jacksonville (up from 43.7% to 58.4%) and Las Vegas (up from 48.8% to 59.8%).
- The biggest decreases in returns were in Salem, Oregon (ROI down from 82.7% to 43.1%) and Atlanta (down from 43.9% to 36%). Minneapolis (down from 43.8% to 40%), Los Angeles (down from 48.2% to 45.2%) and San Francisco (down from 75.2% to 72.8%) also showed declines.
- Raw profits on median-priced home sales in 2022 topped $100,000 in 79, or 50%, of the 157 metro areas with sufficient data to analyze, with the leaders all in the West.
- The smallest raw profits in 2022 were mainly in the South and Midwest, reflecting lower home prices in those areas than elsewhere.
- Home sellers in the U.S. who sold in the fourth quarter of 2022 had owned their homes an average of 5.85 years, down from 5.96 years in the previous quarter and from 6.05 years in the fourth quarter of 2021, the report said. That’s the third-shortest average home-seller tenure since 2012.
- All-cash purchases accounted for 36.1% of sales of single-family homes and condominiums. That number has continued to rise, although it remains below the 38.5% in 2011 and 2012.
- Foreclosure sales to lenders accounted for just 1.2% of single-family homes, the lowest since at least 2005. Those figures were highest in Michigan (3.2% of sales), Illinois (3%), Connecticut (2.2%), New York (1.9%) and Arkansas (1.9%).
- Institutional investors accounted for 1 of every 15 single-family home and condo sales in 2022 nationally, which was down from 8.1% in 2021 but was still more than twice the 2.9% level in 2020, the report said.
- The Federal Housing Administration provided loans for 1 of every 13 single-family home and condo purchases. That figure was down from 2021 (8.3%).