US real estate values rose throughout 2022, and as a result, sellers made more profit. A recent report reveals that they made an average of US$112,000, an increase of 21% on the previous years. In addition, Florida property owners made some of the biggest profits, with Florida metros taking 8 of the top 10 places for best investment returns.
Increase in home values translates to more profit
The first half of 2022 saw sharp upticks in US house prices, with double-digit increases a regular monthly appearance. The Fed’s change in monetary policy led to higher mortgage interest rates and a slowdown in prices. However, they continued to rise throughout the year.
By the end of 2022, US sellers were making an average of US$112,000 profit, a 21% increase on 2021. According to a report from Attom, sellers made more in 98% of US housing markets. This percentage and profit margin are the highest since 2008.
Hot spots for profit from US real estate
Topping the table was Hilo in Hawaii, where sellers made a full 100% return on their transactions. In second and third places were Lake Havasu City-Kingman in Arizona and Spokane in Washington, with ROI figures of 88.4% and 86.2%, respectively.
However, the Sunshine State proved the hottest spot for investment returns and metros within the state accounted for 8 in the top 10. Florida property owners netted returns from 58.4% to 82.4% last year.
Fort Myers and Ocala highest
The highest gains from real estate sales were in Fort Myers and Ocala. Florida property owners made over 80% in both metros in 2022, up from around 50% in 2021. Joining them was Port St Lucie, where sellers made 84.8% last year, up from 62.8% in 2021.
Other Florida metros
Completing the Sunshine State octet were Florida’s traditional real estate hot spots. Property owners in Miami enjoyed 64.1% ROI on their sales, while those in Orlando saw 62.2% profit.
Owners in Tampa and Jacksonville also reaped substantial profits last year. Sellers in Tampa could expect a 73.8% return on their sale, while those in Jacksonville saw an average of 58.4%.
Florida metros highest price gains
The Attom report also found that Florida metros experienced the biggest price hikes during 2022 compared to 2021. Naples and Fort Myers topped the table, with house values rising by 26.9% and 26.7% last year.
In metro areas with at least 1 million inhabitants, the Sunshine State took two places in the top five. Tampa real estate experienced the biggest price hike, with property increasing by 21.9% last year. In Orlando, house values went up by 17.7%.
Outlook for 2023
2022 represented an exceptional year for sellers throughout the US, despite the slowdown in the market in the second half. But how will the market fare this year?
Analysts believe that profitability will probably lower this year in the wake of the doubling of mortgage rates. “It seems pretty likely that home seller profits peaked for this cycle in 2022,” said Rick Sharga, Executive Vice-President of market intelligence at Attom.
However, the Fed’s recent decision to slow interest rate rises may turn the tables. And despite a slower growth curve, house prices will probably continue to increase in the most popular parts of the country.
The Sunshine State remains a hot spot for relocation and retirement. For example, Zillow ranked Jacksonville as the nation’s sixth hottest market this year and the PWC Emerging Trends in Real Estate 2023 placed Tampa in its Super Sun Belt category this year. As a result, Florida property owners can expect excellent ROI for their purchases.