ATTOM Data Solutions executive says 2017 was a big year for home seller profits – Dallas Business Journal

Home profits on the sale of homes in Dallas-Fort Worth have been climbing for years, but there are signs those profits might be plateauing in the future, says one housing analyst.

By the end of the year, the average profit from the previous purchase price of a home in North Texas was $69,496 with an average home ownership tenure of 7.33 years, according to Irvine, California-based ATTOM Data Solutions, a national property database firm that tracks the U.S. housing market.

That profit is down by roughly $5,000 from the previous quarter, which had an average profit of $74,000 from the previous purchase price of a home — the highest profit ever recorded in North Texas.

“This could mean we’ve reached a tipping point in Dallas-Fort Worth,” Daren Blomquist, a senior vice president at ATTOM Data Solutions, told the Dallas Business Journal. “But we are also seeing shorter home ownership tenure from previous quarters and if you own a home for a shorter period of time it’s likely you haven’t made as much profit.”

Dallas-Fort Worth outperformed the average profit in the United States. Nationally, home sellers snagged an average profit of $54,000, which is a 10-year high in the United States.

Even with profits reaching a decade-long high, Blomquist said homeowners in the United States are also staying in their homes longer with an average tenure of 8.18 years.

“The data in Dallas suggests the inventory is breaking up a little bit and it could be a good time to sell and move up into another home,” he said. “In turn, hopefully this frees up inventory for the first-time homebuyer in the Dallas market. The flow was interrupted by the housing downturn, but it looks like Dallas is moving back to a more regular rhythm of a healthy housing market.”

Typically, first-time homebuyers live in an entry-level home for 4 years to 5 years before moving up into a bigger home, Blomquist said.

That movement in the market churns out existing homes for new first-time homebuyers to enter the market, he said, but that hasn’t happened, in part, because the recent trend of lengthy home tenure has kept some of the entry-level housing supply to a minimum.

And there’s good reason for longer home tenure as home prices continue to skyrocket in North Texas.

“There’s still a challenge of finding that move-up home in Dallas and that’s one of the reasons people may decide not to move up in the Dallas market,” Blomquist said, adding that housing affordability and rising interest rates would also likely impact the housing industry this year.

“This year, in Dallas and many other markets, I think we’ll see price appreciation slow down and we’ll see some headwinds with affordability constraints and rising interest rates,” he added. “But it’s still a really good time to sell.”

Source Article