It’s kind of surprising given the breakneck speeds homes are selling at these days, but home seller profits actually slipped in the first quarter of the year -- both at the nominal level and as a share of the seller’s initial investment.
According to a new report from ATTOM Data Solutions, in the fourth quarter of 2020, the average home seller made a whopping $75,750 on their sale. In the first quarter of 2021? That number fell to $70,050 -- about a $5,700 difference. All in all, sellers are seeing about a 34% return on investment this year, down from 37% last quarter.
“The market did take a break from rising prices in the first quarter of 2021,” said Todd Teta, chief product officer at ATTOM Data Solutions. “While that’s not unusual for the beginning of the year, it’s definitely something to keep on eye on as we move into the spring buying season.”
Fortunately, profits weren’t down everywhere, and there are still some markets where returns are growing. Let’s dive in.
Strong profits still a possibility
To be fair, home seller profits are still way up annually. Compared to the beginning of 2020, sellers make about 26% more on their transactions on average. Profits are also up about $15,000 from that time.
In some cities, though? Returns far surpass that. In Knoxville, Tennessee, for example, profit margins jumped from 45% to a whopping 122.1% this quarter. Sellers in nearby Nashville nearly doubled their returns, with ROIs going from 48.2% to 92.1%. The typical Nashville seller now makes nearly $150,000 from the sale of their home.
The top cities for profit increases were:
- Knoxville (122.1% returns)
- Nashville (92.1% returns)
- Boise, Idaho (102.8% returns)
- Crestview-Fort Walton Beach, Florida (58.7% returns)
- Chattanooga, Tennessee (72.5% returns)
- Columbus, Ohio (60.6% returns)
- Baltimore (41.1% returns)
- Phoenix (55.4% returns)
- Seattle (83.3% returns)
According to ATTOM’s data, profit margins tend to be highest in the West and lowest in the South.
In terms of ROI, 16 of the top 20 metros were located in the West. The smallest ROIs were largely in the South, with Columbus, Georgia; Memphis, Tennessee; Shreveport, Louisiana; Lafayette, Louisiana; and Montgomery, Alabama taking the top five spots.
Selling a property?
If you’re selling a home in the near term, you can still expect to make a hefty profit. It just may be a bit smaller than what sellers saw a few months ago.
As Teta put it, “The next few months will speak huge volumes about whether the market keeps barreling ahead. For now, though, sellers remain in the driver’s seat, ringing up great profits.”