California home sellers endured a larger-than-expected drop in profits as prices barely budged during the second quarter.
Now, the state’s home sellers enjoyed a still-healthy $317,347 profit and a 66% return on their investment – both are much better than the nationwide average – but were significantly lower than a year ago, according to ATTOM Data.
Profits – actual dollars in pockets – were down 6.8% compared to a year ago, while the return on the investment was off 9.5% in California. San Francisco had the largest declines, with profits falling 9.3% and returns tumbling 12.3% (see table, below).
The profits and returns are based on when owners bought and how much they paid for their home compared to the sales price. Many owners who buy and hold their homes for a decade or more often generate head-turning profits in the state (see tenure rates by city, below).
Home seller profits and return on investment slide in Q2
| City | % return on investment | Profit | % vs. a year ago |
|---|---|---|---|
| Bakersfield | 62.4% | $136,000 | -4.3% |
| Fresno | 59.8% | $150,125 | -9.0% |
| Los Angeles | 581.% | $360,000 | -5.3% |
| Riverside | 63.4% | $225,000 | -6.1% |
| Sacramento | 54.1% | $201,750 | -8.8% |
| San Diego | 66.7% | $360,000 | -8.9% |
| San Francisco | 72.3% | $499,000 | -9.3% |
| San Jose | 101.2% | $830,000 | -0.6% |
| Santa Rosa | 58.2% | $296,000 | -8.9% |
Source: ATTOM Data
‘STILL SITTING AT PRETTY GOOD LEVELS’
For example, San Jose-area homeowners doubled their money and walked away with $830,000, easily the best profit and return in the nation. Four of the five cities with the largest profits were in California — San Francisco at $499,000, and Los Angeles and San Diego at $360,000.
“While profit margins aren’t going up significantly, they’re still sitting at pretty good levels,” said ATTOM CEO Rob Barber. “The median home sale last quarter netted a 50% profit (nationwide), whereas in the years right before the pandemic, the typical seller was netting around 30%.”
A dismal housing market – home sales remain below the 300,000 threshold and have dropped three straight months – coupled with higher mortgage rates and near-record prices have hurt this spring and the first month of summer, according to the California Association of Realtors.
“Sellers are demonstrating greater willingness to negotiate on pricing, concessions and other terms, which creates more advantageous conditions for those considering a home purchase,” said CAR chief economist Jordan Levine.
Average years of homeownership
- Bakersfield: 10.0
- Fresno: 10.6
- Los Angeles: 10.8
- Riverside: 10.2
- Sacramento: 11.1
- San Diego: 10.8
- San Francisco: 12.6
- San Jose : 12.2
Source: ATTOM Data
Home prices barely move in Q2
| City | Median sale price | % from a year ago |
|---|---|---|
| Bakersfield | $353,000 | +0.9% |
| Fresno | $400,000 | +1.3% |
| Los Angeles | $980,000 | +1.6% |
| Riverside | $579,000 | +1.1% |
| Sacramento | $575,000 | -0.7% |
| San Diego | $900,000 | -0.6% |
| San Francisco | $1.19 million | -0.6% |
| San Jose | $1.65 million | +3.1% |
| Santa Rosa | $807,250 | +2.2% |
Source: ATTOM Data
NATIONWIDE PROFITS SLIP, TOO
The combo has greatly affected the profit and returns of sellers in California and nationwide, according to ATTOM Data.
Nationwide, the average home seller had a 50% return during the second quarter, compared to 56% a year ago. Sellers had a $123,000 profit in the April-June period, almost $200,000 less than in California.
But prices have stalled in the state, with a median sales price of less than 1% in the second quarter (see the median sale price by city, below).
Bad for sellers, but a positive sign for would-be home shoppers, who are enjoying more homes on the market, fewer sales and little price gains. However, fewer than one of every five households could afford to buy, according to the latest CAR report.
