The tight housing supply, the extreme demand by buyers, and the overall irregular conditions we’ve faced for the last couple of years have made the housing market prime for home sellers. And, these conditions have also made it incredibly difficult for buyers and renters who are looking for housing.
According to a new report from ATTOM, a real estate data publisher, home seller profits rose 45% year-over-year in 2021, and are now up to $94,092 in average profit. In 2020, the average profit was $64,931—and just $55,000 the year prior.
The giant leap in profits is attributed to the continued acceleration of appreciation in markets across the country. The Case-Shiller Index now tracks at 276.12 points, up about 19% since this time last year—with over 90% of markets increasing profit margins throughout 2021.
So how is this massive growth affected buyers and renters—and how will it affect the housing outlook for these two groups in the future? Here’s what you should know.
Home buyers faced extreme challenges throughout 2021
At the start of the pandemic, the Fed lowered interest rates to near-record lows. This helped flood new buyers into the market, exacerbating the housing shortage and spiking prices—and rates continued to fall throughout 2021. This created a storm of home sales that culminated into one of the greatest housing markets on record for sellers—and one of the worst for buyers.
“What a year 2021 was for home sellers and the housing market all around the U.S. Prices went through the roof, kicking profits and profit margins up at a pace not seen for at least a decade. All that happened as the virus pandemic raged on, which actually helped drive the increases instead of [stifling] them,” said Todd Teta, chief product officer at ATTOM.
“Households that escaped job losses from the pandemic dove into the market, in large part as a response to the crisis. And the rising demand led the market boom onward. No doubt, there are warning signs…