Photo: David Sawyer/Flickr
With demand on the rise while national home inventories still sit well below historic levels, upward pressure on home prices has remained constant. And, sellers in many markets where affordable homes are a growing scarcity — like San Jose, CA — are cashing in big time on higher home prices.
San Jose sellers are earning more in profit than the value of the typical American home, according to a newly released report by the listing site Zillow.
“In a housing market that’s been plagued by low inventory and increasing demand, homeowners in the nation’s hottest markets have been able to cash in when they sell their homes,” Zillow Senior Economist Aaron Terrazas says in the digital release.
Nationally, sellers made nearly $39,000, or 21 percent, on the sale of their home compared to what they originally paid for it. Typically, sellers lived in their home for 8.4 years before selling it.
Sellers on the West Coast, where home prices have recorded some of the largest gains over the last 10 years, are seeing even more staggering profit levels.
In San Jose — one of the country’s hottest housing markets — sellers are earning 54 percent, or $296,000, in profit when they sell. This was the highest profit level of all the metros analyzed by Zillow for the report.
San Francisco sellers also made out quite well when selling, earning 45.5 percent on average, or $222,000, in profit.
The profit alone earned by San Jose and San Francisco sellers is well above the median national home value — $215,600, according to Zillow.
Meantime, most sellers are simultaneously looking to buy their next home.
Some 71 percent of sellers were looking at the same time they were selling, but in the majority of the markets analyzed profits weren’t enough for a 20 percent downpayment on the median priced home in the same area.
Sellers only made enough to cover a downpayment in places where they saw the biggest percent gains on the sale — San Jose, San Francisco, Los Angeles, CA, Seattle, WA, Portland, OR, Houston, TX, Dallas, TX and Nashville, TN.
“The profits are welcome news for home sellers who are able to cash in on higher home prices, but demonstrate how difficult the market is for buyers,” Zillow writes in the report.
The profits from the sale of their former home is giving some sellers a distinct advantage over first-time buyers, who may be coming into the marketplace with smaller down payments.
And, with increased demand for housing and limited supply, it is becoming more common for homes to sell for above the listed price. In 2017, nearly 25 percent of all homes sold for more than the asking price — up from 18 percent in 2012.
Click here to read the entire release.