LOS ANGELES (AP) — Homeowners who held off on selling their home in 2022 as the housing market slowed missed out on a windfall and may have to settle for slimmer profits if they opt to sell this year.
The sale of a median-priced U.S. home last year translated into a profit of $112,000, a 21% increase from a year earlier and the largest on records going back at least to 2008, according to a report released Thursday by Attom, a real estate data tracker.
“It seems pretty likely that home seller profits peaked for this cycle in 2022,” said Rick Sharga, Attom’s executive vice president of market intelligence.
Years of soaring prices powered the big profits for U.S. home sellers last year, ensuring outsized gains even as sharply higher mortgage rates knocked the housing market into a skid.
Long-term homeowners who decide to sell this year should also benefit from more than a decade of rising home values, but the likelihood that home prices will fall further this year sets the stage for more modest gains.
Chattanooga’s home price appreciation
The median price of single-family homes sold in Chattanooga hit an all-time high in June 2022 of $328,725, up nearly 20% from a year earlier. The median annual price of Chattanooga homes has risen steadily over the past decade at an average annual pace of nearly 12%.
Source: Greater Chattanooga Association of Realtors
“Median prices have declined on a monthly basis since mortgage rates doubled between January (2022) and October, and are likely to decline further in many markets across the country in 2023, reducing profitability for home sellers,” Sharga said.
Surging mortgage rates and sky high prices last year slammed the brakes on what had been a red-hot housing market during the first two years of the pandemic. Home sales cratered as higher borrowing costs combined with years of rising home prices pushed homeownership out of reach for many Americans, especially first-time buyers.
Homeowners who sold last year still reaped the financial rewards from years of home equity gains, however. The return on investment for a median-priced U.S. home sold last year was a whopping 51.4%, up from 44.6% in 2021, Attom found.
The Irvine, California-based firm calculated the return on investment by comparing the sale of a median-priced U.S. home in 2022 to the previous median purchase price.
The national median home price has more than doubled since 2012, when the U.S. housing market was just beginning to recover from the bursting of the housing bubble and Great Recession. It rose 10% last year to $330,000, an all-time high, according to Attom.
Still, that gain is below 2021's 17.6% rise, when the housing market was still being fueled by historically low mortgage rates.
The average rate on a 30-year mortgage hit a two-decade high of 7.08% last fall as the Federal Reserve continued to boost its key lending rate in a quest to cool the economy and tame inflation.
Mortgage rates have been falling in recent weeks. The average rate on a 30-year home loan slipped to 6.15% this week, the lowest since September, mortgage buyer Freddie Mac said Thursday. A year ago, the average rate was 3.56%.