Those who decided to sell their homes in 2021 saw an average profit of $94,092 on a typical sale, according to a report by Attom Data Solutions. That was a 45% increase from $64,931 in 2020 and a 71% increase from $55,000 two years ago.
Compared to sellers in 2021, who achieved a 45.3% return on their initial investment, the ROI in 2020 was 33.6%, while it was 30.6% in 2019, the last full year without pandemic conditions % lay.
That 12 percentage point year-over-year increase is the largest annual gain since 2013, Attom added.
Average home prices rose 16.9% to $301,000 in 2021, according to Attom calculations.
"All of this happened as the virus pandemic raged on, which actually helped drive the increases rather than stifling them," said Todd Teta, Attom's chief product officer, in a press release. "Households that have avoided job losses from the pandemic have largely entered the market in response to the crisis."
A separate report by Zillow calculated that US homeowners gained a record $6.9 trillion in equity last year, with the total housing stock valued at $43.4 trillion. The 2021 surge was more than double the previous record gain of $3.7 trillion in 2005.
“Even in the context of a year that saw multiple housing records smashed, the scale of housing market growth in 2021 is staggering,” said Jeff Tucker, senior economist at Zillow. "Not only were prices rising faster than ever, but more homes were being built than any year since 2007, when homebuilders were scrambling to meet demand."
However, there is a large discrepancy between the top and bottom ends of the market. Nationally, the top third of the highest-rated homes account for 60.8% of the total market value, while the lowest-rated third accounts for 12.8%, Zillow said. By location, 21.3% of the nation's real estate value is in California at $9.2 trillion. Meanwhile, 13 other states have a combined value of over $1 trillion.
According to the Radian Home Price Index, home prices nationwide rose 15.9% year-on-year between November and December, the 10th consecutive month that home prices rose more than 10% month-on-month. The data used to calculate the index comes from Red Bell Real Estate, owned by the Radian Group.
Year over year, the Radian HPI was up 14.2%. In 2021, the 12-month appreciation rate was almost double the 8.0% rate set in 2020.
The median selling price for 2021 was a record $457,000, up from the previous peak of $381,000 in 2020. In December, Radian estimated the median selling price was $307,022.
"The average owner saw an estimated increase in home value of more than $38,000, creating trillions of dollars in potential borrower capital," noted Steve Gaenzler, Radian's senior vice president of product, data and analytics. "However, the market remains tough for many potential buyers — competition is fierce, supply is low, entry options are more limited than ever, and for the first time more than a quarter of homes sold are priced at $500,000 or more."
In December, homes priced above $500,000 accounted for 28% of all sales, while those homes accounted for 16% in the same month of 2019. On the other hand, lower-priced homes selling under $250,000 accounted for just 11% of sales in December 2021, up from 18% two years earlier.
If the inventory shortage was bad in 2020, "it's only gotten worse since then," Gaenzler said. "The combination of limited supply and record-high demand has pushed up prices and shortened the time it takes for homes to sell, but it has also made it a very difficult market for many potential buyers."
But as we enter 2022, mortgage rates are rising, further hurting affordability. And experts expect further hikes.
"There are undoubtedly warning signs that the rate of increase may be slowing this year," said Attom's Teta. "But 2021 will go down in history as one of the greatest years for sellers and one of the toughest for buyers."
Good news for buyers could be that existing homeowners are choosing to move earlier than they have in recent years. Those who sold in the fourth quarter owned their homes for an average of 6.14 years, the shortest average tenure since the first quarter of 2012, Attom said. This was down from 6.34 years in the previous quarter and from 8.03 years in the fourth quarter of 2020.
"Rising home values may be celebrated by longtime homeowners, but are discouraging for those trying to buy their first home," added Zillow's Tucker. "This year will likely be less competitive for buyers, but it will continue to be a sellers' market."