Hefty price gains generated head-turning paydays for home sellers during the fourth quarter in California, but profit-margins have narrowed significantly the past few years.
Some of the biggest paydays for sellers – including a nation-leading $782,750 in San Jose – were in California during the October-December period, according to ATTOM Data. But the Golden State, where million-dollar homes are almost the norm in many markets, has lost some of its luster.
California’s average payday for home sellers increased 5.8% during the final quarter of the year, based on an aggregate of eight of the largest markets in the state. Seven of the eight regions had an increase of money in the pockets of sellers, including a 12% boost in San Jose and 11% in Los Angeles. The Sacramento region had no change.
But the actual profit-margin – also called the return on investment – was a bit bumpier during the fourth quarter compared to the same three-month period a year ago. Five of the eight regions reported a decline in profit margins from a year ago, with the state eking out a paltry 1.9% gain, largely because of a 6% margin in Silicon Valley.
Home seller price gains, profit margins in Q4 2024
| Metro | Q4 profit from sale | % profit change from a year ago | % profit on investment | % ROI change from a year ago |
|---|---|---|---|---|
| Bakersfield | $145,250 | +7.6% | 71.8% | +2.6% |
| Fresno | $165,000 | +3.1% | 71.7% | -1.0% |
| Los Angeles | $366,500 | +11.1% | 63.4% | +3.4% |
| Riverside | $235,500 | +2.4% | 70.4% | -3.8% |
| Sacramento | $215,000 | 0% | 61.4% | -3.7% |
| San Diego | $372,000 | +5.4% | 73.2% | -1.1% |
| San Francisco | $500,000 | +4.8% | 79.4% | -0.4% |
| San Jose | $782,750 | +11.9% | 105.8% | +5.9% |
Source: ATTOM Data
BUY AND HOLD – THEN SELL FOR A LOT OF MONEY
Now, paydays and profit margins are based on when buyers purchase and sell their homes, and the average California homeowners remains in their home almost 11 years (see list, below). So, a super-large majority – one estimate says 98% — of sellers in California walked away with money in their pockets. In most cases, a lot of money (See table, below).
Four cities in California had the largest profits for sellers in the U.S. – San Jose, San Francisco, San Diego and Los Angeles. But San Jose was the only city in the state to crack the top return on investment list.
Nationwide, the average home seller – from Portland, Maine, to Portland, Ore. – enjoyed a near-record payday of $122,500 with an almost 54% return on their investment, down from 57% in 2023.
Cash in California
33.4% of sales were cash deals in the fourth quarter
“After a weak 2023, the U.S. housing market mostly rebounded nicely in 2024,” says ATTOM CEO Rob Barber. “Prices went back up at a healthy clip and homeowners continued to make some of the best profits on sales in the past 25 years. The renewed shine, however, didn’t come without a bit of tarnish as margins took another turn for the worse.”
‘HISTORICALLY HIGH LEVELS OF PROPERTY EQUITY’
In California, the tarnish was minimal. A large majority of homeowners in the state are considered equity rich (see table, below), where they have more equity than debt with a mortgage, according to ATTOM Data.
Plus, about one of every three homebuyers paid in cash during the fourth quarter in California, including a state-leading 37% in Los Angeles.
“It certainly wasn’t a downer for homeowners across the country who are sitting on historically high levels of property equity thanks in large part to the endless increases in home values over more than a decade. Nearly half of all residential mortgage payers in the U.S. have paid off at least half their loans, leaving many with six-figures levels of wealth available to leverage anything from new home purchases to starting new businesses to paying off major expenses.”
Home sweet home for how many years?
- Bakersfield: 9.54
- Fresno: 11.03
- Los Angeles: 10.56
- Riverside: 9.91
- Sacramento: 10.62
- San Diego: 10.42
- San Francisco: 12.64
- San Jose: 12.38
Source: ATTOM Data
