If you sold your home in 2016, then the odds are you saw a pretty hefty profit when you checked out that cashier’s check at the closing table. According to ATTOM Data Solutions, homeowners who sold their homes last year saw an average home price gain since purchase of $38,206 or 21 percent. By comparison, 2015 posted 13 percent gains. This is the highest profit sellers have seen since 2007, when they snagged an average 28 percent. In 2006 average gains were 40 percent and in 2005 average profits were 44 percent. Prior to that, values had been climbing steadily since 2000.
According to ATTOM’s Year-End 2016 U.S. Home Sales Report, three major metro areas in the country showed more than 50 percent average percentage gains since purchase. San Francisco and San Jose, Calif., blew the competition away with 69 percent increases. Santa Rosa, Calif., posted gains of 52 percent. Los Angeles, Calif., and Seattle, Wash., “trailed” with 49 percent and 48 percent gains, respectively.
When ATTOM compared statistics for gain since purchase nationwide year-over-year, the country as a whole experienced 6.8 percent more gains in 2016 than they did in 2015. In Tampa, Jacksonville and Orlando, Fla., those year-over-year gains were all in the double digits at 14 percent, 12.9 percent and 10.1 percent, respectively. Portland, Ore. and Denver, Colo., also posted double-digit year-over-year gains with 12.1 percent and 11.3 percent, respectively.
Perhaps most exciting for Midwestern investors was the news on the Ohio real estate front. Dayton, Columbus and Cincinnati, Ohio in all popular cash-flow turnkey real estate markets, all posted all-time home price peaks in 2016. Local experts credit lack of inventory and rising demand for properties for the record-setting prices. As well as citing the transition from a “manufacturing economy to a service-based economy,” as Matthew Watercutter, senior regional vice president for HER Realtors, described it. He added the region is still experiencing some appraisal issues due to the fast pace of home sales because there is not enough time for comp sales prices to catch up with offer prices. “This can only be rectified through strong sales, so the issue will likely resolve itself,” he says.
If you like to follow the “big money” when making your own investments, then you’ll definitely be looking south and east in 2017. According to the report, all of the top institutional investor markets are located in Georgia, Alabama, or Tennessee. Columbus, Ga./Ala., ranked first with more than 1 in 10 purchases being made by a large investment firm. Birmingham ranked second with 1 in 10, and Memphis, Tenn. and Montgomery, Ala. followed closely behind with just under 10 percent of all real estate purchases being made by hedge funds and other institutional investors. Cash sales fell slightly over the past year despite high investor activity in many areas of the country, with fewer than 1 in 3 homes being bought for cash (28.3 percent), the lowest number since 2007.
The milestones detailed in the report seem to indicate how the national market might be leveling off into a subdued recovery but the “fine print” on the data makes it clear that real estate investing still cannot be a national pursuit. As an investor, whether “passive” or actively involved in the daily management of your investments, you must carefully evaluate your market in terms of your strategies, specifically, rather than relying on a general and somewhat vague “good feeling” about things that can be derived from this type of report.
You can read more of Carole’s coverage of this and other topics at www.selfdirectedinvestor.org.
About the Author
Carole VanSickle Ellis serves as vice president of research and analysis at the Self-Directed Investor Society, helping investors “declare independence from Wall Street.” Contact her at firstname.lastname@example.org or visit sdiradio.com.