For the first time in 99 months, home sellers in March received $30,500 more than their original purchase price — a 17 percent average gain and the highest level of return since December 2007 when the housing recession began, according to RealtyTrac’s March and Q1 2016 Home Sales report.
Senior Vice President of RealtyTrac Daren Blomquist said the report shows another milestone of a rebounding national real estate market.
“Homeowners can now expect, in most markets, to actually sell for more than the original purchase price,” he said. “That is a consistent expectation across the country.”
Metros featuring the highest average percentage gains — based on gains versus purchase price rather than highest price — were San Francisco at a 72 percent average gain and San Jose at a 60 percent average gain.
Blomquist said those who sold a home in San Jose in March walked away with $312,000 more than what they originally paid on average, and In San Francisco, the average seller also made over a quarter of a million dollars.
[graphiq id=”lKCj8zfGGEd” title=”San Jose, CA Profile” width=”600″ height=”591″ url=”https://w.graphiq.com/w/lKCj8zfGGEd” link=”http://places.findthehome.com/l/15038/San-Jose-CA” link_text=”San Jose, CA Profile | FindTheHome”]
“Even if you take out the bias toward higher priced markets, San Jose and San Francisco performed very well in that respect,” he said.
Boulder, Colorado had a 53 percent average gain and Prescott, Arizona had a 51 percent average gain. Los Angeles was at the bottom of the top five with a 48 percent average gain.
Prices growing – and dipping – in unsuspecting places
Home prices peaked in 36 percent of markets in 2015 or 2016, with March being a top month for Colorado cities Boulder, Denver, Fort Collins and Greeley, as well as Portland, Austin and Cincinnati.
On the contrary, 17 percent of markets featured year-over-year dips in March, including Washington D.C., which fell 7 percent. San Francisco faced a surprising 2 percent drop after 47 consecutive months of price increases.
Blomquist says the common denominator is that in these particular markets, there’s an uptick in the sale of distressed homes. Washington D.C. includes the counties in both Maryland and Virginia, the former of which has an increase in foreclosure activity, and in turn is translating into a mix of distressed sales.
In D.C., distressed sales rose from 19 to 20 percent year-over-year. From the last quarter of 2015 to the first quarter of 2016, distressed sales rose from 18 to 20 percent.
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In San Francisco, distressed sales are down annually, but on a quarterly scale, they increased from 10 to 12 percent.
“These two markets are getting close to hitting a ceiling, believe it or not,” Blomquist said. “Home prices have been going up for about four years, and there’s a limit, even in San Francisco.”
Baltimore home prices were down 6 percent year-over-year in March. Blomquist was less surprised with RealtyTrac’s findings in the city because of its distressed market.
“We did see an uptick quarter-over-quarter in the share of distressed sales, from 25 percent of sales in the fourth quarter to 29 percent in the first quarter,” he said of Baltimore. “That mix is pulling prices down a bit.”
Distressed sales on the rise in the East
Distressed sales — which also include bank-owned properties, foreclosures (in process) and short sales — increased quarter-over-quarter on the East Coast, from 17.2 to 18.2 percent share of all sales. However, annual distressed sales are down from 20.8 percent in the first quarter of 2015.
New York City, D.C. and Boston had year-over-year increases in the share of distressed sales at 3 percent, 4 percent and 5 percent increases, respectively.
While Blomquist stresses these markets go against the national trend, he also notes that they correspond with increases in the number of foreclosures.
“It’s certainly not good news for these markets. This is a reflection of an increase in distressed sales in those markets, which will weigh down on home prices,” he said.
Metros with quarterly distressed sales increases included Boston (up 24 percent), San Francisco (up 19 percent) and NYC (up 16 percent).
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While there are double-digit increases in the aforementioned markets, it could be a seasonal reflection of banks choosing to sell homes based on higher demand in the Spring.
“Going forward, we could see loosening of inventory, because more homeowners would be more willing to list their homes for sale now that they can get that kind of gain they could have received before the recession,” he said. “Two things that are pointing toward more inventory for sale would be higher price gains for homeowners as well as the uptick in distressed sales.”
