LA homeowners netted $175K in profit when selling in 2017
With houses in the Los Angeles area fetching record prices, sellers pocketed some of the largest profits in the nation in 2017, according to a new report from Zillow.
Across Los Angeles and Orange counties, homeowners last year sold homes for around $137,000 more than the price they paid for the residence, amounting to a 33.1 percent gain in value.
In the city of Los Angeles, jumps in value were even more dramatic. Prices in 2017 were nearly 40 percent higher than what the seller paid, with a median dollar increase of $175,000.
The Los Angeles metro area was one of just five of the nation’s 35 largest housing markets where homeowners saw the price of their home increase by six figures between buying and selling.
Nationwide, sellers typically sold their homes for prices 20.8 percent higher than what they paid—for a total profit of $38,856.
According to the report, the median length of time LA-area sellers owned their homes before selling was just over nine years in 2017. That means that many of those who listed houses for sale last year bought during the Great Recession, when prices dropped off from levels that today’s home prices have only recently surpassed.
Part of what we’re seeing is recovery from the housing bust,” says Sarah Mikhitarian, a senior economist with Zillow. She notes that in coming years, profits for sellers may not be as large because they’ll be less likely to have purchased homes during the crash.
Los Angeles was also one of eight metro areas where the average profit for sellers was enough to afford a 20 percent down payment on a new home, making it easier for sellers to return to the market as buyers.
But that doesn’t mean most homeowners are eager to list their residences. Mikhitarian points out that the number of homes on the market has declined 4 percent in the LA area since last year.
“It’s still really difficult to sell and then turn around and be a buyer in the LA market,” she says.
Rising interest rates may be scaring off some potential sellers who could face significantly higher mortgage payments when purchasing their next home.
More homeowners staying put makes for a more competitive market, in which bidding wars are common and homes often sell for well above asking price.
It’s a complex landscape for buyers and sellers alike, and home values were up last year in some areas much more than others. Sellers in Inglewood, Bel Air, Ocean Park, and West Adams all saw price increases of at least 70 percent between buying and selling. In Downtown LA and downtown Long Beach, price gains were more modest—21.5 and 19.2 percent, respectively.
Bel Air sellers saw the largest profits by sheer dollar amount. Homeowners there sold their homes for nearly $1 million more than the purchase price. Typical time between buying and selling in Bel Air: 10.3 years.
Source: Curbed LA