The intrepid homeowners who sold their properties as the coronavirus pandemic ramped up in the U.S. this spring pocketed record-high profits.
Nationally, home sellers made a profit of about 36% on their sales in the second quarter of 2020, according to a recent report from real estate information firm ATTOM Data Solutions. That translated into a median $76,000 gain over what they originally paid for the property. It’s also just over 14% more than what sellers made in the second quarter of the year.
ATTOM analyzed recorded sales deeds, foreclosure filings, and loan data to come up with its findings. The firm calculated the difference between median purchase and resale prices to figure out seller profits in 104 metropolitan areas where sufficient data was available and where there had been at least 1,000 single-family home and condo sales in the second quarter. (Metros include the main city and surrounding suburbs and smaller urban areas.)
“The housing market across the United States pulled something of a high-wire act in the second quarter, surging forward despite the encroaching economic headwinds resulting from the coronavirus pandemic,” Todd Teta, ATTOM’s chief product officer, said in a statement. “Profit margins hit new records as prices kept climbing, with few indications that the impact of the virus would topple the market.”
The high profits are due to a scarcity of supply. The country was experiencing a severe housing shortage before COVID-19, and the pandemic made it worse. Many sellers pulled their homes off the market or decided to wait out the health crisis before listing.
However, the virus hasn’t dampened buyer demand. Record-low mortgage rates, which fell below 3% for the first time, have spurred a rush of new buyers. They’re joining those who were planning to buy in the spring during the shutdowns and those who had hoped to purchase in the summer, as well as apartment dwellers and starter-home owners who realized in quarantine that they wanted more space.
These buyers are bidding up the prices of homes—which means more money for sellers.
Where are profits shooting up the most—and the least?
Sellers in the Spokane, WA, metro area had the biggest annual gains in profit this quarter. They earned about 61.2% over what they originally spent on their home in the second quarter of last year. That jumped to 76% in this past quarter, according to ATTOM. The median home list price in the Spokane metro area was roughly $388,000 in June—about 8.1% higher than in the same month a year ago, according to realtor.com® data.
On the other end of the spectrum were the places where sellers made less than in the previous year. Profits dropped in just 23 of the 104 metros analyzed.
The biggest falls were in the Pittsburgh metro area, where the median home price was $274,500 in June. Sellers went from pocketing 28.6% over what they had paid for their homes to making 20.9%.