Los Angeles ranks No. 5 nationally in return on investment for long-term homeowners
Los Angeles homeowners who sold last year after holding on to their homes for a long period of time saw sizable returns on their investments.
The typical Los Angeles home seller made $200,000 on the sale of a home in 2016 after owning it for a median period of nine years and eight months, according to a Zillow study released this month.
That 53.7% gain, during a time of rising home prices nationwide, was better than 28 of the 33 metropolitan areas studied.
West Coast cities did especially well, thanks to well-paying jobs — many of them in the tech sector — and the patience to wait a little longer before selling.
People who sold their homes in West Coast cities often held on to their homes longer than the typical seller,” said Zillow chief economist Svenja Gudell. “Combined with the strong home value growth they saw, sellers in Western cities were really able to cash in.”
Zillow crunched the numbers and found that the best return on investment was in Oakland, where the typical seller last year sold a home for an average of $590,000 after living in it for a median period of seven years and three months. That was 78% more than what the seller initially paid.
That was followed by Portland, Ore., where the typical seller sold for about $145,000 more than what he or she paid nine years and one month earlier, a 65% gain.
Around Southern California, Long Beach was No. 11, with a 43.7% return; San Diego was No. 17, with 33.3%.
“Nationally, it’s financially advantageous to buy a home rather than rent if you plan on living in it for at least two years and one month, but staying much longer than that has really paid off,” Zillow said.
By dollar amount, not percentage gain, San Jose had the best return on investment, with sellers pocketing $271,150 after a median period of nine years and eight months of ownership.
The worst percentage return on investment for home sellers was in Baltimore, with a 5.4% payout, or $5,000. But home sellers there held on to homes the least amount of time of any region studied — just three years and five months.
Gudell said low inventory and strong competition in top markets mean returns may not be as lucrative as they seem.
“Even as sellers are making a significant profit when they sell, if they’re planning to buy in the same area, they’ll be on the other end of the process,” Gudell said.
In Los Angeles County, the median price for a home in August surged 9.4% year over year to $580,000, according to data firm CoreLogic.
Source: Los Angeles Times