By Sabrina Karl
In 2018 and 2019, median home prices across the country rose between 4 and 5 percent. But over this past historic year, the median home price jumped by about triple that amount, sending seller profits dramatically upwards.
That’s according to new findings from property database firm ATTOM Data Solutions, which released its annual Year-End 2020 U.S. Home Sales Report last week.
The U.S. median home price increased 12.8 percent in 2020, hitting an all-time annual high of $266,250. That dwarfs the increases of 4.4 percent in 2019 and 4.8 percent in 2018, and represents the country’s largest annual increase since at least 2006.
Seller profits were also up significantly, reaching their highest level since at least 2005. Calculated as the difference between the median sales price of sold homes and the median price of those homes at their previous sale, sellers nationwide averaged a home-price gain of almost $69,000. That’s compared to profits of $53,700 in 2019 and $48,500 two years ago.
Calculated as a percentage return on investment, seller profits in 2020 returned almost 35%, up from 29% and 27% returns in 2019 and 2018, respectively. It represents the ninth consecutive year of a housing price boom, which has seen profits increase every year since 2011. It’s also the seventh year of positive profit gains, after housing profits plunged negative from 2008 to 2013 as a result of the Great Recession.
The coronavirus pandemic has wreaked havoc on much of the nation’s economy. But buyers who were relatively unaffected financially, including a segment who sought to move away from harder-hit urban areas, were additionally motivated by historically low mortgage rates due to pandemic-related moves by the Fed. At the same time, the 2020 supply of available homes was suppressed by the pandemic, resulting in substantial upward pressure on prices.