Home sellers in 2017 made a median profit of about $39,000 in 2017, according to data Zillow  released recently. Having owned their homes for about eight and a half years, their profit return was about 21 percent.
With 71 percent of sellers in the market for a new house though, the question remains, how easy is it for them to purchase a new home at today’s prices, even with their newfound returns.
Zillow calculated the typical length of time a 2017 seller owned their home before selling and then found the median price gain on sales in major U.S. metros. It then compared this gain to the price of a 20 percent down payment on a median-priced house in April 2018.
At a national level, the $39,000 returns sellers reaped in 2017 was not enough to cover a 20 percent down payment on a median-priced home, which comes to about $43,000, the study found.
In fact, in 25 of the 33 metros, Zillow covered profits earned in 2017 fell short of a 20 percent down payment in the same market today.
In New York, the nearly 15 percent gain translated to $46,000 in earnings. While that is above the level for a 20 percent down payment at the national level, in New York, a 20 percent down payment is significantly higher, about $84,960.
In Chicago, sellers faired similarly, gaining $19,900, which is less than half what is needed for a down payment in the metro—about $43,600
The outliers, where home sellers did earn enough to cover a down payment in their market, included a handful of high-priced markets in the West.
In San Jose, California, homeowners reaped $296,000 in profit after owning their homes for almost nine years. This was more than enough for a $252,780 down payment on a median-priced home in the area. In fact, this profit was higher than the national median home price.
In percentage terms, San Jose ranked highest for median percent change in price between home sales with a 53.8 percent increase.
San Francisco (45.5 percent); Seattle, Washington (44.7 percent); and Portland Oregon (37.6 percent) also posted high rates of return. As in San Jose, sellers in these markets can afford a down payment on a median-priced home with the profits earned on the sale of their home.
The good news for the sellers in those markets where they did not earn enough for that 20 percent down payment is their earnings still often give them an edge over first-time buyers.
Today’s sellers “typically are buyers as well, but the profits from the sale of their former home give them an advantage over first-time buyers who may be coming in with smaller down payments,” said Aaron Terrazas, Senior Economist at Zillow.