Cash+Coast = Big Home Sales Gains

Cash+Coast = Big Home Sales Gains
April 27, 2017 Marketing GrafWebCUSO

Home sellers made big gains in the first quarter, but, on average, they had to wait twice as long as pre-recession sellers making similar gains, according to a report released Thursday by ATTOM Data Solutions.

The U.S. Home Sales Report by ATTOM, a real estate analytics company based in Irvine, Calif., shows most first-quarter sellers made more than $44,000 over their purchase price, the best gain since the typical seller made $45,100 in the third quarter of 2007, on the eve of the Great Recession.

The difference was that sellers back then had owned their homes for an average of 4.4 years. Sellers in 2017’s first quarter had owned them nearly eight years.

“It may have taken longer to get there, but sellers are in a place in most markets to sell and get a nice return from their investment,” said Daren Blomquist, ATTOM’s senior vice president.

The report shows the median sales price for single-family homes was $225,000 in the first quarter of 2017, up 13.4% from 2016’s first quarter.

The median sales price and the size of the increase were the biggest since the 2005’s third quarter, in the middle of the pre-recession housing bubble, when more than half of homes sold for more than $227,000, a 15.2% gain from 2004’s third quarter.

Blomquist said the report shows the continuing strength of the housing market, with limited supply favoring sellers and squeezing out many first-time buyers of single-family homes and condos.

One indication is that FHA buyers, who are typically first-time homebuyers, accounted for 14.5% of home sales in the first quarter, down from 15% a year earlier and falling to its lowest level since the first quarter of 2015.

On the other hand, another sign of a strong sellers’ market is that cash buyers still account for an unusually high proportion of sales.

All-cash sales represented 30% of sales in the first quarter, down from 32.1% in 2016’s first quarter and a peak of 44.7% in 2011’s first quarter. However, cash sales are still well above the pre-recession average of 20.4% from January 2000 through September 2007.

“It’s a reflection that’s it’s still a very competitive market, where some buyers are being left out in the cold,” Blomquist said. “Cash is king. If you have cash, that puts you at the head of the line in multiple-offer situations.”

Cash might be king, but coasts seem to count too.

The first-quarter sales gains were dominated by metro areas in the Pacific states and, to a lesser extent, those along the East Coast. Of the 97 metro areas, 43 metro areas had sales gains exceeding the U.S. average of 24% from a year earlier. Of those 43 above-average metro areas, 26 were in Pacific states or along the East Coast.

The five metro areas with the biggest gains were San Jose-Sunnyvale-Santa Clara, Calif. (71%), San Francisco-Oakland-Hayward, Calif. (65%), Seattle-Tacoma-Bellevue, Wash. (56%), Portland-Vancouver-Hillsboro, Ore.-Wash. (52%) and Modesto, Calif. (51%)

Among the 17 metro areas away from the Pacific and Atlantic coasts the biggest gains were in Denver-Aurora-Lakewood, Colo. (50%), Greeley, Colo. (44%), Fort Collins, Colo. (43%), Austin-Round Rock, TX (39%) and Flint, MI (38%).