California home sellers enjoyed hefty gains during the first quarter, while others nationwide endured the smallest profits of the past two years.
The state’s booming housing market – highlighted by a critical shortage of available homes that lifted the median home price to a record $904,000 in April – has created huge paydays for sellers.
The aggregate gain of the eight regions in the state was $325,500 and a profit margin of 75%, according to ATTOM Data (see table, below). The current profit is slightly more than the $324,500 in 2023.
BUY-AND-HOLD FORMULA IS REAL ESTATE GOLD
San Jose-area home sellers had a nation-leading $700,000 money-in-pocket profit, doubling their investment with the purchase. San Jose sellers’ annual profit jumped 18.4% from a year ago, followed by 16.5% in San Diego and 14.8% in Bakersfield.
The money and percentage gains are based on when homeowners purchase and sell their homes. The figures do not include expenses, such as home-improvement projects over the years or real estate-related costs. For example, San Jose sellers remained in their homes for 11.6 years – the second-longest tenure behind San Francisco at 12.2 years.
Californians buy and hold homes for about 10.7 years, longer than sellers in other states. The longer-term homeownership helps generate better profits because of increased home values and more equity.
GOLDEN STATE SHINES WHILE NATIONAL MARKET STRUGGLES
Nationwide, the average home seller had a 55.3% profit margin, significantly lower than California – and the worst in two years. Falling home prices, down about 4%, were the primary reason for the slide.
“The latest price and profit numbers show notably downward trends, which raises new questions about whether the housing-market boom is indeed ebbing, or even ending, after so many years of improvement,” says ATTOM CEO Rob Barber. “But due caution is needed in looking at the first-quarter data and what the patterns mean. We saw a similar downward pattern from late 2022 into early 2023, and then the market surged.”
California slowed but never really slumped during that period, despite higher mortgage rates because of a severe shortage of homes available for sale. Affordability, which dropped to a modern-day record low in 2023, is a concern but there are enough buyers to power the resilient market.
The current dip nationwide is far from a sky-is-falling situation, Barber says. Home sellers are still walking away with a $120,500 profit.
“Profits and profit margins still are very high by historical measures,” Barber says. “Amid all that, the spring buying season will be a huge barometer for whether the market still has steam in its engine.”
Home seller profits and percentage gains in Q1 2024
| Metro | Q1 profit from sale | % profit vs. Q1 ’23 | % profit on investment |
|---|---|---|---|
| Bakersfield | $147,500 | +14.8% | +79.0% |
| Fresno | $165,400 | +8.5% | +75.1% |
| Los Angeles | $344,000 | +12.3% | +61.4% |
| Riverside | $230,000 | +6.5% | +70.8% |
| Sacramento | $207,000 | +6.2% | +62.2% |
| San Diego | $361,000 | +16.5% | +73.8% |
| San Francisco | $449,250 | +8.3% | +75.4% |
| San Jose | $700,000 | +18.4% | +100% |
Source: ATTOM Data
