The housing market has exploded in the past year. According to the carefully followed S&P CoreLogic Case-Shiller indexes, national home prices rose 19.8% in August, compared to the same month of last year. In one of the largest cities, Phoenix, home prices rose by 33.3%. In Boise City, Idaho, however, people made the most money selling homes.
Why have these increases in home prices happened? One reason is very low mortgage rates that are making homes more affordable. Another is that people have decided to relocate from the country’s largest cities, mostly on the Atlantic and Pacific coasts, to less expensive cities inland. One trigger for this is that millions of people can now work from home and can do so from anywhere.
Ironically, this rush to some cities has caused prices in those cities to spike by well into the double-digit percentages. These, however, are major metro areas with the most affordable housing.
Some people and companies have been able to take advantage of the swift rise. They have positioned themselves to buy homes and flip them quickly. Moreover, people who have owned their homes for years have decided to take advantage of the sharp increases to cash in.
Real estate research firm ATTOM recently analyzed the home sales trend in its feature “Seller Profits Increase Across U.S. in Third Quarter as National Median Home Price Reaches Another Record.” 24/7 Wall St. reviewed ATTOM’s report to find the markets where people made the most money selling homes in the third quarter.
The report points out that the U.S. housing market remains strong. Further, “the typical home sale across the country during the third quarter of 2021 generated a profit of $100,178 as the national median home price hit a record of $310,500,” according to the report.
The study covered 204 markets. In 86% of them, the difference between the median purchase price and the resale price — the profit margin — increased.
Two other trends were noted. Institutional investors accounted for 7.3% of purchases of homes in the quarter — the highest level in more than seven years. This activity is almost always to set up homes for rent or sell them quickly at a profit. Another trend is that 34% of purchases were made by cash — the highest level in more than six years.
The city with the largest percentage increase in profit margins was Boise, where the figure in the third quarter of 2021 was 130.3%. This is up from 61.4% last year. In areas with populations over a million, the winner was Detroit, up to a 68% profit margin compared to 43% last year. (And this is the city where homes are selling fastest.)
While in some cities profit margins fell, they were still among the highest nationwide.
Click here to see the city where people are making the most money selling homes
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