Sellers are Pocketing their Biggest Profits since the Peak

Single family home and condo sellers in the first half of 2015 sold for more above their purchase price in the first half of this year than any time since prices were at the peak of the boom.

Homes sold for an average of 13 percent above their original purchase prices, the highest average percentage in home price gains realized by sellers since 2007, when it was 30 percent, according to RealtyTrac.

Major markets where sellers in the first half of 2015 realized the biggest average home price gains were San Jose, California (41 percent); San Francisco (37 percent); Denver (29 percent); Portland (25 percent); Los Angeles (25 percent); and Seattle (20 percent).

“Sales activity has been strong this year and the metrics point to a solid foundation for steady growth. Growing boomerang buyer interest and first time buyer participation combined with smarter lending requirements are fostering a sustainable market,” said Mark Hughes, chief operating officer with First Team Real Estate, covering the Southern California market. “Lower investor, cash, and distressed activity are three reliable indicators that peripheral buying and selling activity is settling back down and the traditional owner occupied residential market is back on solid ground and healthy.”

There were six major markets where sellers in the first half of 2015 on average sold below their original purchase price: Chicago (7 percent below); Cleveland (7 percent below); Hartford, Connecticut (3 percent below); Jacksonville, Florida (2 percent below); St. Louis (1 percent below); and Orlando (1 percent below).

Zillow and Case-Shiller both reported strong appreciation in their first quarter reports, Zillow at 5.2 percent year over year for its 20-city composite and Case-Shiller at 5.0 percent.

“Home price appreciation has settled into a nice groove over the past few months, and ought to remain there going forward. This is still more proof that the for-sale market, while certainly not yet fully healed, is continuing to return to normal,” said Zillow Chief Economist Dr. Stan Humphries when the first quarter results were released May 26. “But relative strength in one indicator shouldn’t be confused with full recovery. Inventory is very low and the housing market is still very much out of balance, particularly on the rental side, where rapid rent increases and tepid wage gains are contributing to a deepening rental affordability crisis. This will make it more difficult for current renters to save up and make the transition into homeownership, particularly for younger would-be buyers the market so sorely lacks and needs.”

Single family homes and condos in June sold for an average of $291,450 compared to an average $287,634 estimated market value for those same homes at the time of sale - a 101 percent price-to-value ratio. June was the first time since July 2013 that the national price-to-value ratio exceeded 100 percent.

Major metro areas with the highest price-to-value ratios — where homes sold the most above estimated market value — were San Francisco (106 percent); Hartford, Connecticut (105 percent); Baltimore (105 percent); Rochester, New York (104 percent); and Providence, Rhode Island (103 percent).

Other major markets with price-to-value ratios above 100 percent in June included Washington, D.C. (103 percent); Phoenix (103 percent); Sacramento (103 percent); Portland (103 percent); Seattle (102 percent); San Jose (102 percent); and St. Louis (102 percent);

Sales volume at highest level since 2006 in 16 percent of markets analyzed

The number of single family homes and condos sold in the first four months of 2015 were at the highest level in the first four months of any year since 2006 in 43 out of 264 (16 percent) metropolitan statistical areas with sufficient home sales data. Markets at nine-year highs included Tampa, Denver, Columbus, Ohio, Jacksonville, Florida, and San Antonio.

There were 23 markets where sales volume in the first four months of 2015 was at 10-year highs, including Denver; Columbus, Ohio; San Antonio; Tucson, Arizona; and Palm Bay-Melbourne-Titusville, Florida.

Among major metro areas with a population of 1 million or more, 22 out of 51 markets (43 percent) were at eight-year highs for single family home and condo sales in the first four months of the 2015, including New York, Dallas, Houston, Seattle and Portland.