Bubble 2.0: Home Sellers In Q2 2017 Reap Highest Average Price Gains In A Decade

Tyler Durden's picture

ATTOM Data Solutions released its Q2 2017 U.S. Home Sales Report, which shows that homeowners who sold in 2Q 2017 realized an average price gain of $51,000 since purchase.  To put that in perspective, that is the highest average price gain for home sellers since Q2 2007, when it was $57,000 and the U.S. was in the midst of the biggest residential real estate bubble in history.  Moreover, that average gain of $51,000 in Q2 2017 represented an average return of 26% on the original purchase price of the home, the highest average home seller return since Q3 2007, when it was 27%.

Here's a great chart from ATTOM that breaks down the results by metro area.  Not surprisingly, several northern California and Florida markets logged some of the biggest gains.

 

 

Of course, there is a slight catch.  As RealtyTrac points out, while aggregate seller gains may be roughly the same as 2007, those gains are being spread over a much longer ownership period of roughly 8 years rather than 4 years.  And while RealtyTrac attributes that longer ownership period to a tight housing market, we suspect it has something to do with the dichotomy of homeowners with those who purchased before the crash just now breaking even on their homes (no equity = hold longer) and those who purchased after the crash behaving more 'normally.'

The report also shows that homeowners who sold in the second quarter had owned an average of 8.05 years, up from 7.85 years in the previous quarter and up from 7.59 years in Q2 2016 to the longest average homeownership tenure as far back as data is available, Q1 2000.

 

“Potential home sellers in today’s market are caught in a Catch-22. While it’s the most profitable time to sell in a decade, it’s also extremely difficult to find another home to purchase, which is helping to keep homeowners in their homes longer before selling,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “And the market is becoming even more competitive, with the share of cash buyers in the second quarter increasing annually for the first time in four years.”

 

Meanwhile, institutional buyers continue to scoop up a record number of homes, particularly in the cheaper Southeast markets.

The share of U.S. single family home and condo sales sold to institutional investors (entities buying at least 10 properties in a calendar year) was 2.1 percent in the second quarter, up from 1.8 percent in the first quarter but down from 2.6 percent a year ago.

 

Among 73 metropolitan statistical areas with a population of at least 200,000 and at least 40 institutional investor sales in Q2 2017, those with the highest share of institutional investor sales in the second quarter were; Macon, Georgia (8.9 percent); Memphis, Tennessee (8.6 percent); Killeen-Temple, Texas (8.3 percent); Clarksville, Tennessee (7.8 percent); and Birmingham, Alabama (7.4 percent).

 

Counter to the national trend, 19 of the 73 metro areas (26 percent) posted year-over-year increases in the share of institutional investor purchases, including Memphis, Tennessee (up 6 percent); Charlotte, North Carolina (up 6 percent); Nashville, Tennessee (up 37 percent); Baltimore, Maryland (up 3 percent); and Raleigh, North Carolina (up 42 percent).

 

Of course, the problem with institutional buyers is that they tend to run in massive herds...and when the herd starts to sell...well, you can guess how that will play out.

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SHEEPFUKKER's picture

The home/burger flipper eCONomy. God bless America. 

Shitonya Serfs's picture

Wongs buying in CA/WA. Sellers in CA/WA moving to CO/TX. Buyers in Southeast (institutionals) buying cheap property to rent back to people there.

The_Juggernaut's picture

It's somehow remarkable to the author that people who bought at the bottom of the market (eight years ago) are seeing large profits?  lmfao!

 

---edit:

http://www.zerohedge.com/news/2017-07-27/rents-across-us-hit-new-all-tim...

there's simultaneously a ZH article talking about record rent prices.  Of course institutions are buying.

gilhgvc's picture

Bought our house in Vegas 8 yrs ago, 235K out of foreclosure, house was in good shape. Just appraised at 441K.

Handful of Dust's picture

There's lots of houses for sale where I live. Three years ago there were a total of 586 and now there are over 1,767 according to zillow.

I know because I bought three years ago and there was a 3-6 month wait for a "brand new" house. Now there are dozens on the market. Luckily, I did get a pretty good deal 'cause it was in early December and the builder had lots and lots of inventory they wanted to dump before Jan 1st. I got it for $67k below the original listing price.

Yes, I know, all RE is local.

Chauncey Gardener's picture

You know it's a bubble when your realtor sells his home and moves into a rental after making a BIG killing in a year and a half on a new tract home down the block. This Portland market is endemic of what's happening damn near everywhere. The problem is, a two bedroom apartment rental here is a fuck of a lot more than my mortgage. 

Never One Roach's picture
Office market woes to last a while Even strong areas are likely to feel effects, observers say

 

http://www.houstonchronicle.com/business/columnists/sarnoff/article/Offi...

 

That was back in April, 2016 and I read that Houston office tenants had the 6th straight quarter of negative growth; namely, more tenants moving out of their Houston office space then into Houston.

Pollygotacracker's picture

How many Chinese nationals are purchasing west coast property to launder the money they made selling heroin (fentanyl)? Just askin'.

John Law Lives's picture

This game of "hot potato" can be fun... until you are the chump stuck with the hot potato and you eat massive losses when the market craters.

Fed_FUBAR

Kidbuck's picture

The buyer's purchasing power has been fucked by the Fed. Inflation is theft.

rp2016's picture

I believe zillow manipulates data.

JohnGaltUk's picture

Its different this time OK