POST TAGSMortgage News
Blog posted On November 09, 2021
Last week, property database ATTOM released its U.S. Home Sales Report for Q3 of 2021. The results of the report revealed that median-priced single-family homes had the highest profit margin in 10 years. It also showed that returns on sales rose at the fastest quarterly pace in seven years and fastest annual pace in over a decade.
The profit margin of a home is the difference between the purchase price and resale price. For example, if you bought a home for $200,000 and sold it for $300,000, your profit margin is $100,000. Profit margins on median price single-family homes jumped to nearly 48% in the third quarter of 2021. Though this might not sound like much, it’s the highest profit margin since the end of the Great Recession. The average home profit amount for quarter three was $100,178. This is up from $88,800 in quarter two and $69,000 in Q3 of 2020. Sales profits are skyrocketing as the national median home price continues to rise. “The third quarter of this year marked another period in a banner year for a housing market boom that’s steaming ahead through its tenth year,” said Todd Teta, chief product officer at ATTOM. “Prices and seller profits again hit new highs since the market started coming back from the Great Recession in 2012.”
In quarter three of 2021, home sellers had only owned their home for an average of 6.31 years. This is virtually unchanged from 6.29 years in quarter two of 2021 – the shortest average homeownership tenure since 2013.
Overall, the housing market is extremely profitable for homeowners and home sellers right now. Home equity has surged to an all-time high, giving homeowners more net worth, and more power. There are several ways that you can take advantage of your home equity, including a cash-out refinance or home equity line of credit (HELOC). With a cash-out refinance, you can use the equity in your home to help fund other investments like college tuition, paying off high interest debt, or home improvements. With a home equity line of credit, you can have more fluidity with your equity. Or you can take advantage of the high profit margins and sell. Either way, you’re likely sitting on more equity than you thought you had before.
And if you’re looking to buy, you can still take advantage of mortgage rates that are lower than the pre-pandemic averages. Overall, the housing market is still booming with profitability. “There have been a couple of small hints of a possible slowdown in recent months, as we head into the normally quiet Fall and Winter seasons,” said Teta. “But, for now, the market engine seems to have nothing but high-octane gas in the tank.”
Since the beginning of the pandemic, the housing market has been fueling the economy. Many thought when the economy recovered, the housing market would stumble. But even as we move toward a more normal economy, the housing market is still going strong. And the recent slowdown in is actually a good sign that we are slowly returning to a more normal market.