Tuesday, November 14, 2006

A Little Perspective on Housing?

High Profits Even in Slumping Markets

In October, the average San Diego home sold for $485,000, a 5.5% decline from October of 2005. The actual number of homes sold was down 21% year-over-year. But that doesn't mean all those sellers were losers. Hardly. According to research from First American Real Estate Solutions, a real estate data unit of title insurer First American, the average home seller in San Diego made a profit of $243,000 that month. That's the different between the price they bought it at, five years ago on average, and what they sold it for today. First American calcuates that only 6% of San Diego sellers lost money on their homes, most likely because they bought it in just the past year. The story looks even better in other parts of Southern California where home prices have held up better than San Diego. In San Bernadino County, east of Los Angeles, the average home seller made a $203,000 profit on the typical $360,000 home. That's an average annual return of 25% over the four-year average holding period. The First American data is a reminder that many people still have a tremendous amount of equity in their homes, even if some their neighbors have had to lower their asking prices.

Nov 15, 2006 - Chris Palmeri - Businessweek

25% - That's a pretty good return on investment, not to mention the leveraged return is much higher.

  • Businessweek Article
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