Sellers realize average price gain of 17 percent from home purchase price, highest in 8 years | Think Realty | A Real Estate of Mind
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Sellers realize average price gain of 17 percent from home purchase price, highest in 8 years

A new report shows that homeowners who sold during the third quarter of 2015 realized an average price gain of $40,658 (17 percent) from the purchase price of their property, the highest average price gain for home sellers since the third quarter of 2007, according to RealtyTrac.

The report also shows home sellers in the third quarter on average had owned their home for 6.72 years when they sold.

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The eight-year high in average price gains for home sellers in the third quarter came despite slowing home price appreciation. The average sale price of single family homes and condos nationwide during the quarter was $263,976, up 0.2 percent from the previous quarter and up 2.4 percent from the third quarter of 2014 — the slowest year-over-year price appreciation in any quarter since home prices bottomed out in the first quarter of 2012.

The report also shows 2,487,664 existing single family and condo sales through the first three quarters of 2015, the highest level for the first nine months of a year since 2006 — a nine-year high.

“An increasing number of homeowners in 2015 have been cashing out the home equity they’ve gained during the housing recovery of the past three years,” Daren Blomquist, vice president at RealtyTrac, said in a release. “That may be a good decision because the data points to a plateauing market going forward.

“Home price appreciation is slowing, a trend that will continue if interest rates rise in the coming months as expected. Meanwhile the threat of rising interest rates combined with lowered premiums for buyers using FHA loans is spurring more demand,” Blomquist added.

Institutional investor share down from a year ago

In the third quarter, there were 15,956 sales of single-family homes and condos to institutional investors, 1.9 percent of all sales. That was up from 1.6 percent in the previous quarter but down from 5.0 percent a year ago.

Eighty metros posted a higher share of institutional investor sales than the national average, led by:
• Montgomery, Alabama (9.8 percent)
• Columbus, Georgia (7.1 percent)
• Muskegon, Michigan (6.0 percent)
• El Paso, Texas (5.5 percent)
• Jacksonville, Florida (5.5 percent).

Other major metros with a high percentage of institutional investor sales included:
• Cincinnati, Ohio (4.9 percent)
• Memphis, Tennessee (4.8 percent)
• Orlando, Florida (3.8 percent)
• Cleveland, Ohio (3.8 percent)
• Columbus, Ohio (3.8 percent).

Share of cash sales at lowest level since the third quarter of 2008

There were 245,220 all-cash sales, typically used by real estate investors, of single family homes and condos in the third quarter, 27.8 percent of all single-family home and condo sales during the quarter. Down from 28.7 percent of all sales in the previous quarter and down from 29.0 percent of all sales a year ago.

Metros with highest share of cash sales in the third quarter were:
• Fort Smith, Arkansas (62.6 percent)
• Rocky Mount, North Carolina (59.6 percent)
• Sebastian-Vero Beach, Florida (55.5 percent)
• Punta Gorda, Florida (52.3 percent)
• Montgomery, Alabama (52.1 percent)
• Miami, Florida (51.5 percent).

Major metros with an increasing share of cash sales included:
• Raleigh, North Carolina (up 36 percent)
• St. Louis, Missouri (up 32 percent)
• New York, New York (up 30 percent)
• Philadelphia (up 26 percent)
• San Jose (up 11 percent).

Buyers using Federal Housing Administration (FHA) loans — typically low down payment loans utilized by first time homebuyers and other buyers without equity to bring to the closing table — accounted for 23.4 percent of all single family home and condo sales with financing — excluding all-cash sales — in the third quarter of 2015, up from 23.2 percent in the second quarter and up from 17.9 percent in the third quarter of 2014 to the highest share since the second quarter of 2012.

Major metro areas with the highest share of FHA loans in the third quarter were:
Bakersfield, California (41.3 percent)
Modesto, California (40.4 percent)
McAllen, Texas (39.7 percent)
Las Vegas, Nevada (37.1 percent)
Riverside, California (37 percent)
Dayton, Ohio (29 percent).

Counties with biggest home seller gains and losses in third quarter

RealtyTrac analyzed 171 counties with at least 500 sales in the third quarter and where home price data was available both on the most recent purchase and the previous purchase. In 20 of those counties (12 percent) home sellers on average in the third quarter sold for a lower price than what they purchased for.

Counties where sellers on average sold for the biggest percentage loss were:
• Pasco County, Florida in the Tampa metro area (11.1 percent loss)
• Hamilton County, Ohio in the Cincinnati metro area (9.4 percent loss)
• McHenry County, Illinois (9.0 percent loss)
• Hernando County, Florida in the Tampa metro area (8.5 percent loss)
• Mobile County, Alabama in the Mobile metro area (6.8 percent loss).

Among these five counties, homeowners who sold in the third quarter had owned for an average of 6.93 years when they sold.

Counties where sellers on average sold for the biggest percentage gain in the third quarter were:
• San Francisco County, California (58.7 percent gain)
• San Mateo County, California also in the San Francisco metro area (55.7 percent gain)
• Santa Clara County, California in the San Jose metro area (47.7 percent gain)
• Alameda County, California in the San Francisco metro area (43.1 percent gain)
• New York County, New York (41.6 percent gain)

Among these five counties, homeowners who sold in the third quarter had owned for an average of 7.04 years when they sold.


Category: Case Studies