Sellers in Competitive West Coast Markets Saw Six-Figure Gains on Home Sales Last Year

Jul 06, 2018 7:55 AM

  • The typical home seller earned almost $39,000 when selling in 2017 – or roughly $15,000 after adjusting for inflation.
  • Among the top 35 metros, home sellers in the Bay Area, Los Angeles and Seattle earned the most. Sellers in eight of the top 35 markets, including New York and Chicago, lost money after adjusting for inflation.
  • The La Gorce neighborhood in Miami, Fla., was the only neighborhood in the top 100 that is not located in California or Seattle.
  • The typical home sold in Mountain View, Calif., earned more than 100 percent of its value since its previous sale – more than $600,000 (or $516,000 in inflation-adjusted terms), a 9.3 percent annualized return.

Homeowners who sold their homes in 2017 gained $38,856, at the median, for an annualized return of 2.94 percent – slightly below last year’s median gain. The past two years (2016 and 2017) were the highest-gaining years for home sellers since 2007, when the typical gain was $47,500. In general, people who sold their homes in 2017 had owned them for a median of almost eight and a half years.

We define a gain as the difference between what a home sold for and what the owner paid for it.

Perhaps unsurprisingly, homeowners in the expensive Bay Area, Los Angeles and Seattle metro areas saw the largest gains on their sales. On average, the median home sale in San Jose, Calif., garnered its owner a whopping $296,000. Even controlling for inflation, the homeowner still saw a $222,000 – or 34.4 percent – return on their investment. Its neighbor to the north, San Francisco, also was good to sellers, who received a median $222,000 gain in nominal terms, or $156,000 after accounting for inflation. Sellers in both these metros held onto their homes for longer than the national median.

Outside the competitive West Coast markets, the metro with the largest gain for 2017 sellers was Nashville, Tenn., which earned $62,000 before inflation for a median 4.7 percent annualized return on their homes. Nashville home sellers last year had owned their homes for a median of seven years – a year and half short of the national median.

On a more local level, sellers in the city of Mountain View, Calif., a suburb of San Jose and home of Google, saw the largest return of any city in the country: 100 percent in nominal dollars, or a whopping 9.3 percent annualized. Just up the road, sellers in Redwood City, Calif., gained $535,000 on their homes since purchase, despite owning the property for less than six years. Typical sellers in many cities in the Miami metro area also gained substantially, especially those in Palm Beach ($212,500 nominal gain), Pinecrest ($175,000), and Coral Gables ($159,200).

Just as the West Coast dominated the metro and city gainers, it swept the list of top gaining neighborhoods in 2017 as well. In fact, of the top 100 gaining neighborhoods, only one of them, La Gorce in Miami Beach, Fla., is located outside Seattle, Los Angeles, San Francisco or San Jose. The typical home in La Gorce earned $573,000 despite being owned for under seven years.

It wasn’t all peachy, however. In eight of the top 35 metro areas, the average homeowner who sold in 2017 actually lost money in inflation-adjusted terms. Homeowners in Chicago fared the worst among the largest 35 metros, seeing a $19,900 nominal return (or a $20,000 loss after accounting for inflation) on their investment, which was held for more than 14 years. Cleveland, Cincinnati and Philadelphia were among other cities where the typical home seller received a negative real return after owning for more than a decade.



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