BAM Key Details:
- ATTOM released its Year-End 2022 U.S. Home Sales Report, which shows an increase in home seller profits for 2022—up 21% from 2021 and up 78% from 2020.
- Home seller profits represent a 51.4% return on investment (ROI), compared to the seller’s original purchase price—up from 44.6% in 2021 and 32.8% in 2020.
Despite the slowdown of the U.S. housing market, home seller profits for 2022 reached their highest level since at least 2008.
According to ATTOM’s Year-End 2022 U.S. Home Sales Report, home sellers made a profit of $112,000 on the typical sale—up 21% from 2021 and up 78% from 2020. That profit represents a 51.4% return on investment.
Here’s what you need to know.
Profit margins reach their highest level since 2008
Even with high mortgage rates putting a damper on home sales, persistently high home prices in the latter half of 2022 kept home seller profits elevated in 98% of the housing markets with enough data to analyze.
The latest nationwide home seller profit figure, based on median purchase and resale prices, reached the highest level in at least 14 years (2008).
The 51.4% return on investment is up from 44.6% in 2021 and 32.8% in 2020.
It seems pretty likely that home seller profits peaked for this cycle in 2022. Median prices have declined on a monthly basis since mortgage rates doubled between January and October and are likely to decline further in many markets across the country in 2023, reducing profitability for home sellers.
Both raw profits and ROI have been on an upward trend for 11 consecutive years, climbing again in 2022 as the national median home price rose 10% to $330,000—hitting yet another annual record.
But at the same time, seller profits rose at a slower pace than in 2021. The national median home price dropped 8% in the second half of 2022 as mortgage rates doubled, consumer price inflation rocketed to a 40-year high, and the stock market slumped.
Naturally, those forces reduced the amounts potential home buyers could afford, cooling buyer demand and potentially eroding home seller profits.
Total home sales last year declined after seeing increases in eight of the previous 10 years.
West and South reaped the highest ROIs on typical homes sales in 2022
Among 157 metro areas with sufficient sales data and populations greater than 200,000, those in the West and South reaped the highest returns on investment in 2022.
Western and southern states had 14 of the 15 metro areas with the highest returns on typical home sales last year, led by Hilo, Hawaii.
Here are the top five on that list:
- Hilo, HI: 100% ROI
- Lake Havasu City-Kingman, AZ: 88.4%
- Spokane, WA: 86.2%
- Fort Myers, FL: 85.4%
- Port St. Lucie, FL: 84.8%
Home prices rose at least 10% in over half of U.S. markets
The national median home price went up 10% in 2022, reaching another all-time annual high of $330,000.
The full-year median home value appreciation in 2022 was less than the 17.6% nationwide gain the year before. But the latest increase in the U.S. median value remains above the biggest increases over the past decade.
Since 2012, the national median home price has grown 120%, and it rose from 2021 to 2022 in all but two of 150 U.S. metro areas with sufficient home price data and populations of more than 200,000. Values jumped at least 10% in 85 of those same metros (54%).
Metro areas with the biggest annual increases were in Florida:
- Naples: median up 26.9%
- Fort Myers: up 26.7%
- Lakeland: up 25.7%
- Port St. Lucie: up 24.6%
- Ocala: up 23.8%
The steepest increases in median home prices came in the following metros with populations of at least one million in 2022:
- Tampa, FL: up 21.9%
- Raleigh, NC: up 17.9%
- Austin, TX: up 17.9%
- Orlando, FL: up 17.7%
Typical home prices for 2022 reached new highs in 153 of the 157 metros (97%) in ATTOM’s analysis, including the top five listed here:
- New York, NY
- Los Angeles, CA
- Chicago, IL
- Dallas, TX
- Houston, TX
Metros where median home prices dropped in 2022—or increased by the smallest amounts:
- Davenport, IA: -2%
- Shreveport, LA: -1.7%
- Baltimore, MD: +2.7%
- Pittsburgh, PA: +2.7%
- Toledo, OH: +2.8%
Profit margins increase in 90% of U.S. metro areas
In 141 of the 157 metros with sufficient sales data (90%), profit margins on typical home sales increased from 2021 to 2022.
That happened because the nationwide 10% increase in sales prices in 2022 more than offset the 5% increases recent sellers had been paying when they originally purchased their homes.
Nine of the 10 largest increases in ROI were in Florida:
- Fort Myers, FL: ROI up from 51% in 2021 to 85.4% in 2022
- Ocala, FL: up from 49.7% to 82.4%
- Naples, FL: up from 44.7% to 74.4%
- Port St. Lucie, FL: up from 62.8% to 84.8%
- Miami, FL: up from 42.9% to 64.1%
Aside from Miami, the biggest ROI gains from 2021 to 2022 in metros with populations of at least one million were in—
- Orlando, FL: ROI up from 42.2% to 62.2%
- Tampa, FL: up from 53.8% to 73.8%
- Jacksonville, FL: up from 43.7% to 58.4%
- Las Vegas, NV: up from 48.8% to 59.8%
The biggest drops in ROI from 2021 to 2022 came in the following markets:
- Salem, OR: ROI down from 82.7% to 43.1%
- Atlanta, GA: down from 43.9% to 36%
- Boise, ID: down from 75.9% to 68.9%
- Prescott, AZ: down from 82.7% to 75.9%
- Sacramento, CA: down from 61% to 54.7%
Aside from Atlanta and Sacramento, metros with populations of at least one million with falling profit margins in 2022 included the following:
- Minneapolis, MN: down from 43.8% to 40%
- Los Angeles, CA: down from 48.2% to 45.2%
- San Francisco, CA: down from 75.2% to 72.8%
Raw profits exceed $100,000 in 50% of U.S. metros
Raw profits on median-priced home sales in 2022 exceeded $100,000 in 79 (50%) of the 157 metros with sufficient sales data.
And West Coast region metros had 17 of the top 20 raw profits, led by San Jose:
- San Jose, CA: $621,000
- San Francisco, CA: $473,000
- Seattle, WA: $304,063
- San Diego, CA: $295,500
- Los Angeles, CA: $272,500
The smallest raw profits came mainly in the South and Midwest, reflecting lower home prices in those regions than elsewhere. Those areas had 19 of the 20 lowest profits on typical home sales, led by the following:
- Columbus, GA: $19,000
- Shreveport, LA: $20,000
- Beaumont, TX: $22,991
- Rockford, IL: $34,500
- Davenport, IA: $38,500
Home seller tenure hovers near 10-year low
U.S. home sellers who sold in Q4 2022 had owned their homes for 5.85 years on average, down from 5.96 years in Q3 of the same year and from 6.05 years in Q4 2021.
The latest figure is the third-shortest average tenure since 2012. Average seller tenures saw annual drops in 77, or 72%, of the 107 metros with sufficient data and populations of at least 200,000.
The biggest drops in average seller tenure from Q4 2021 to Q4 2022 were in the following metro areas:
- Rockford, IL: down 23%
- Atlantic City, NJ: down 22%
- Dayton, OH: down 20%
- Knoxville, TN: down 19%
- Salem, OR: down 18%
The longest home seller tenures in Q4 2022 were in—
- Bellingham, WA: 9.87 years
- Manchester, NH: 8.58 years
- Honolulu, HI: 8.38 years
- Bridgeport, CT: 7.78 years
- New Haven, CT: 7.57 years
Cash sales reached a nine-year high
Across the U.S. all-cash purchases represented 36.1% of single-family home and condo sales in 2022. The biggest percentage—and the highest since 2013—was up from 34.4% in 2021 and from 22.7% in 2020. But it’s still shy of the 38.5% peaks set in 2011 and 2012.
Cash buyers—many, but not all of whom are investors—are in a position of competitive advantage in today’s higher interest rate environment, and will continue to account for a higher-than-usual share of the market, at least until mortgage rates dip back down a bit. With affordability a problem for many buyers—especially first-time buyers—it wouldn’t be a surprise to see the percentage of cash purchases actually increase in 2023.
Among metros with sufficient cash-sales data and populations of at least 200,000, those where all-cash sales accounted for the largest share of all transactions in 2022 were—
- Augusta, GA: 72.1% of sales
- Columbus, GA: 69%
- Athens, GA: 60.6%
- Flint, MI: 59.5%
- Gainesville, GA: 58.9%
Lender-owned foreclosure purchases at lowest level since (at least) 2005
In 2022, only 1.2% or one out of every 87 single-family home sales were foreclosure sales to lenders—the lowest share of total sales since at least 2005.
That figure is down from 1.5% of sales (or one in 68) in 2021 and from 3.6% (or one in 28) in 2020.
States where lender-purchased foreclosure sales (REOs) had the largest shares of total sales in 2022 were these five:
- Michigan: 3.2% of sales
- Illinois: 3%
- Connecticut: 2.2%
- New York: 1.9%
- Arkansas: 1.9%
Among the 156 metros with sufficient data and populations of at least 200,000, those where lender-purchased foreclosure sales had the largest shares of total sales in 2022 were the following:
- Flint, MI: 8.3% of sales
- Binghamton, NY: 4.9%
- Kalamazoo, MI: 4.6%
- Lansing, MI: 4.5%
- Huntington, WV: 3.7%
Among the 55 metros with sufficient data and populations of at least one million, those with the highest levels of lender-purchased foreclosure sales were these five:
- Chicago, IL: 2.8% of sales
- St. Louis, MO: 2.4%
- Detroit, MI: 2.1%
- Grand Rapids, MI: 2%
- Baltimore, MD: 2%
Metros with the smallest levels were—
- Raleigh, NC: 0.2% of sales
- Denver, CO: 0.2%
- Tucson, AZ: 0.3%
- San Francisco, CA: 0.3%
- Colorado Springs, CO: 0.3%
Aside from Raleigh, Denver, Tucson, and San Francisco, metros with populations of at least one million with the smallest shares of lender-purchased foreclosure sales also included Phoenix, Arizona (0.3%).
Sales involving Institutional investors fell to 6.5% in 2022
Nationwide, institutional investors represented 6.5% of total single-family home and condo sales in 2022. That figure is down from 8.1% in 2021 but is still more than double the 2.9% from 2020.
Among metros with sufficient institutional-investor sales data and populations of at least 200,000, those with the highest shares of these transactions in 2022 were—
- Atlanta, GA: 19% of sales
- Memphis, TN: 18.4%
- Jacksonville, FL: 17.9%
- Charlotte, NC: 16.8%
- Tucson, AZ: 16.6%
FHA home sales hit the lowest point in 15 years
Across the U.S., buyers using Federal Housing Administration (FHA) loans represented 7.5% of single-family home and condo purchases in 2022, down from 8.3% in 2021 and from 11.8% in 2020, reaching the lowest level since 2007.
Among metros with sufficient FHA-buyer data and populations of at least 200,000, those with the highest percentage of purchases made with FHA loans are these five:
- Bakersfield, CA: 18.9% of sales
- Visalia, CA: 18.3%
- Merced, CA: 17.7%
- Hagerstown, MD: 15.8%
- Modesto, CA: 15.6%
Top takeaways for real estate agents
Part of doing your due diligence to keep current on your local market (as well as the national one) is keeping up with the latest data on home seller profits. Homeowners in your area who want to sell will naturally be curious about how much of a profit they’re likely to make.
And with mortgage rates still in 6s—which is probably higher than the rates they have now—homeowners will be interested in turning enough of a profit to buy down the mortgage rate for their next home.
Show them the data and the context surrounding it, so you can help them make the smartest decision for them.
As for your buyers, it’s difficult to say what their seller profits could look like five to ten years from now. But you can study up on the unique buyer opportunity present in today’s market.