The typical profit margin on a home sold in the Lafayette market in the first quarter of this year was among the lowest in the country.
Sales were typically sold with at a profit rate of 9.3%, the fourth-lowest in the country and just above Shreveport’s 8.6%, which has been a struggling market in recent months, according to a report from ATTOM Data Solutions. Sixteen of the 20 smallest margins were in the southern United States while the homes with the largest margins were mostly sold in western states.
Profit margins in smaller markets tend to be a little more volatile in smaller markets than larger ones, said Gary Wagner, Acadiana Business Economist with the University of Louisiana at Lafayette’s Moody College of Business. The data is also based on comparisons of current resale prices to initial prices, which could be from years ago and not indicative of the current market.
“The market did take a break from rising prices in the first quarter of 2021, and while that’s not unusual for the beginning of the year, it’s definitely something to keep on eye on as we move into the Spring buying season," said Todd Teta, chief product officer with ATTOM. "The next few months will speak huge volumes about whether the market keeps barreling ahead. For now, though, sellers remain in the drivers seat, ringing up great profits.”
Local data on profits are not available, but the average sale price through the first quarter of this year is up almost 15% from 2020, data from Bill Bacque with Market Scope Consulting shows. The average sale price jumped from $195,395 last year to $224,077.
Profits for home sellers nationwide were up again in the first quarter as another sign of how the housing market is fending off any economic damage caused by the coronavirus pandemic, data shows. The report reveals that the typical first-quarter 2021 home sale in the U.S. generated a profit of $70,050. That was down from $75,750 in the fourth quarter of 2020 but still up 26 percent from $55,750 in the first quarter of 2020.
Small dips in profits are common in the first quarter, officials said, as home buying often dips. But the raw-profits as well as the return-on-investments on sales of median-priced homes in the first quarter of 2021 stood at the second-highest points since the U.S. housing market began recovering from the Great Recession in 2012.
They were among the many signs that the nine-year U.S. housing market boom continues to surge ahead even as the broader economy struggles to rebound from the pandemic’s effects.
Typical profit margins – the percent change between median purchase and resale prices – rose from the first quarter of 2020 to the first quarter of 2021 in 131 of 149 metropolitan statistical areas around the United States with enough data to analyze. Only 18 markets of the 149 surveyed reported a decrease, including New Orleans dropping from 25.8% a year ago to 20.6 this year, the report indicated.