Profits from Home Sales Soared in 2021 to Highest Rate Since 2008
2021, undoubtedly, will go down as a record year for real estate for so many reasons. As all the national market data through year-end has come in and has been analyzed, more and more records are being broken and more details are coming out about the truly remarkable year that real estate had - especially on the seller’s side. National property data analysts at ATTOM have released their annual report on home sale data for 2021 and the results are staggering.
Last year, more than 90% of the real estate markets across the country saw profits on a home sale reach the largest margin in thirteen years! Not since 2008 have profit margins for sellers been so high nationally. In 2021, an average home sale netted the seller a remarkable profit of $94,092! Profits jumped an incredible 45% year over year from 2020, when profits averagedn$64,931. In 2019 the typical seller could expect a profit of approximately $55,000, meaning that in just two years - from 2019 to 2021 - a seller’s profit increased by 71%!
How does this profit margin stack up in terms of an average seller’s return on investment? According to the report, the profit expected in 2021 amounted to a 45.3% return on investment for the seller when comparing with the original purchase price of the home. That is an amazing ROI for a homeseller. While ROI has been increasing every year for the past ten years, 2021’s return on investment was the largest one year gain since 2013.
What factors helped to make 2021 such a banner year for home sale profits? A combination of several things, really. In 2021 the interest rate remained at historically deflated levels. Demand was driven to astronomical levels as the Great Shuffle saw buyers moving in larger numbers than ever. In 2021, more than 5.7 million property transactions took place - the most total sales since 2005. The incredible demand coupled with depleted inventory drove home prices to record-breaking levels all across the country. There are 173 metropolitan areas in the United States with populations of 200,000 or more. All but four of them saw median price increases in 2021. 124 of these metros saw price increases of more than 10%! In the hottest markets, prices rose by even more. Our Florida Keys real estate market, for example, saw home prices increase by nearly 30% in 2021! All of these factors played a part in the profit margins of home sales increasing by such unbelievable levels across the country.
2021 was definitely the year of the seller, while buyers struggled to keep up. 2022 is shaping up to be a similar story. This year, however, interest rates are slowly going up. They are already almost one full point higher than this time last year, and are expected to keep increasing until year end. This is slowing the market and the rate of price increases across the country. As we continue through 2022, the numbers will provide an interesting comparison to last year’s record-shattering sales report.
