Massachusetts Home Sellers See Profits
The terms ‘buyers market’ and ‘sellers market’' get tossed around a lot when discussing the overall real estate market. What these phrases are referring to is whether or not buyers or sellers have the leverage in a home sale transaction. Right now we are in the midst of an incredible sellers market. Demand to buy a home is sky high as mortgage rates have hovered near historic lows. At the same time, the supply of homes to purchase is low because of historically low inventory of homes for sale. This has created a perfect storm that is benefiting homeowners who want to sell their home. Not only is this the predominant market sentiment, it is also backed by data. Profits from home sales have surged over the past year. These profits are a good indication of why now might be the perfect time to sell your home.
The Numbers Behind Surging Home Sale Profits
Home sellers have been able to sell their homes for far more than their asking price. This trend has happened over the past year and the average profit data demonstrates this. According to ATTOM Data Resources the average profit for sellers has increased 26% from the first quarter of 2020 to this year. In the first quarter of 2020, the average profit for a home sale was $55,750. One year later, the average profit is $70,050. This data is visualized in the chart next to this section.
There is more data that indicates home prices have increased dramatically and so have profits. A spokesperson for S&P CoreLogic Case-Shiller said annual gains were the highest in 15 years. The Federal Housing Finance Agency (FHFA) said its growth was more than twice posted last year. The Case-Shiller index increased at an annual rate of 13.2% in March, which was higher than the annual rate in February. All of the numbers have an upward trajectory, which is indicative of surging home sale profits.
Why Have Profits Surged for Home Sales?
In a normal market, prices are determined by supply and demand. When demand soars and supply remains limited, then prices increase. That is exactly what has happened over the past year. Millions of Americans have recognized that the mortgage rate environment over the past year has made buying a home a great opportunity. Unfortunately for home buyers, there are a very limited number of homes to purchase. Demand has exceeded supply and this has sent home prices through the roof. Today’s home buyers find themselves in bidding wars versus other buyers to try and purchase the homes of their dreams. Competition has been fierce between bidders and home sellers are winning in almost every instance.
Other Benefits for Home Sellers
Aside from profits, selling your home in today’s market is convenient. Intense buying pressure is increasing the price at which you sell your home. It’s also increasing the number of cash-only transactions. The cash sales surged to 25% in April 2021, compared to a number of 15% last year and 20% in 2019. We can also see cash sales rising with vacation sales. Vacation home buyers are now paying with cash, with a rising rate that increased to 8% from 6%.
Cash-only home sales are convenient for home sellers because they decrease the number of people involved. There is nothing wrong with buying a home with a mortgage or selling your home to someone who is financing. However, it does cause extra steps. Lenders have strict requirements and obligations for home sellers and home buyers. Failure to meet these requirements or steps could jeopardize financing and could cause the sale of the home to fail. Selling your home to a cash-only buyer means that you don’t have to worry about a lender pulling out of the deal. This can happen at the last minute. It also means that your home sale can go through much quicker.
Final Thoughts
Today’s real estate market could not possibly be better for homeowners who are interested in selling their homes. Low inventory and high demand mean that home sellers can expect the most possible for their homes on the open market. In addition, selling your home has never been easier given that home buyers are willing to do anything to close a deal.
While today’s market is great for sellers, we never know what tomorrow brings. Markets go in cycles and today’s sellers market could turn into tomorrow’s buyers market. So, if you have thought at all about selling your home, there might never be a better chance than now. Selling your house now allows you to take advantage of your leverage and get the most profit possible.
If you have been interested in selling your home, but do not know where to get started, contact us! The team at Streamline Realty knows the Massachusetts real estate market inside and out. We can walk you through the home selling process step-by-step. Together we will let you know how to get the most profit possible out of selling your home. Nobody has a crystal ball, which means it is anyone’s guess how long the real estate market will be a sellers paradise. One thing is certain, it’s better to maximize your profit while you can and sell while your house is in high demand. Otherwise, you might be wanting to sell your house at a time when the buyers have all the leverage.
