Homeowners who sold properties last year made a 21% profit, on average, according to online real estate site Zillow, but sellers in certain areas of the country saw much larger gains.
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Overall, the average seller owned the property for nearly 8.5 years and netted about $39,000 on the sale. However, sales on the West Coast were among the most lucrative in the U.S., exceeding the average transaction profit by hundreds of thousands in some cases.
Sellers in San Jose, California, for example, made the largest profit on their homes last year, with a median price gain of 53.8%, or $296,000. However, for those looking to buy a new property in the area, San Jose also had by far the highest average down payment requirement, at $252,780.
Owners in another California metropolitan area, San Francisco, achieved the second-largest gains on home sales in 2017, at 45.5%, or $222,000.
In both San Francisco and San Jose, Americans made more on the sale of their homes than the median value of a typical home in the U.S., according to Zillow.
In Seattle, sellers made slightly less than their San Francisco counterparts, with an average gain of 44.7% on the transaction.
Portland, Oregon, homeowners saw gains of 37.6%, or $87,000, while those in Nashville saw the fifth highest average sales profits at 34.4%.
On the flip side, individuals who sold their homes in Chicago last year experienced the smallest median percentage gain between sales, at just 8.6%, or $19,900 more than what they had paid for it eight years prior.
"In a housing market that's been plagued by low inventory and increasing demand, homeowners in the nation's hottest markets have been able to cash in when they sell their homes,” Zillow senior economist Aaron Terrazas, said in a statement, noting, however, that many sellers are also buyers.
The median home price in the country overall rose from $237,387 in 2016 to $238,800 in 2017, according to Harvard’s Joint Center for Housing Studies (JCHS). As interest rates rise, monthly payments on homes will rise in tandem – and could increase by more than $140 this year.
Home prices are now higher than they were at the peak of the housing boom in nearly 60% of the country’s largest markets, the JCHS study found, with the least affordable markets found along the coast of California and in New York.
The National Association of Realtors and Freddie Mac estimate that median price growth will accelerate by 3.5% in 2018, and in some cases will continue to rise faster than income gains over the coming years.
Constraining the housing market right now is a mix of factors, including a shortage of construction workers, rising costs of raw materials and increased regulatory burdens for developers. All of these have led to an increase in prices, which has made it difficult for first-time buyers to enter the market.