Selling your home isn't as profitable as it used to be
Selling your home now may not reap as much of a profit as you would hope.
The typical person who sold a condo or single-family home in the first three months of 2023 netted a profit of $98,350, an analysis from real estate data provider ATTOM found. That's down from $104,000 in the final three months of 2022 and from $124,000 around the middle of last year.
The money you make on selling your place has dwindled because home prices nationwide have been either flat or declining in recent months, ATTOM said.
"Nine months of varying price declines around the country have carved away almost a quarter of the profit margin sellers were enjoying in early 2022," ATTOM CEO Rob Barber said in a statement. "That's a striking reversal of what we saw for a decade."
Profits for selling a home are shrinking at a time they might ordinarily be expected to rise as the spring home buying season revs up. Yet many homeowners, having seen their property values increase last year, are choosing not to sell at a time when increasing mortgage costs make it much more expensive to buy a new place.
"They are sitting in a really great financial position and that's why most homeowners aren't selling," said Zillow economist Orphe Divounguy. "Sellers are sitting back. They have no reason to trade their low mortgage for a high rate."
In its analysis, ATTOM examined the median purchase and resale price for homes sold in 137 of the nation's biggest metropolitan areas. Profit margins fell in 93 of those metro areas between the final months of 2022 and first quarter 2023, ATTOM found.
Profit margins fell most steeply in Prescott, Arizona; Stockton, California; Louisville, Kentucky; Buffalo, New York and Akron, Ohio; ATTOM's data shows. Margins rose in cities such as Lake Havasu City, Arizona; New Jerseys' Atlantic City and Trenton; and Pennsylvania's Reading and Scranton.
"If you have seen your home value go up 50% to 60% in the last two years, and then it's only gone down about 8% since the market started to slow down, you are still far ahead," he said.
Selling a home this year may not yield as strong of a return as it did in 2022, but it's still a more lucrative option than ever before. Sellers typically made $43,500 in profit during the first quarter of 2019, just before the pandemic began. A decade ago, sellers typically lost about $19,100 when they sold their home, according to ATTOM data.
Of course, selling a home is more likely to be more profitable than flipping another property. A separate ATTOM study released last month found that investors flipped more than 407,000 single-family homes and condos last year and made an average windfall of $67,900. That may seem like a tidy profit, but it's the lowest amount since the housing bust triggered the 2008 financial crisis.
—Aimee Picchi contributed to this report.
