Home Flipping Slowdown Could Be Temporary, Report Says

March 1, 2019

Fewer homes were flipped in 2018, but investors are still on the hunt and have not shied away from quick resales, according to a new report from ATTOM Data Solutions, a real estate data firm.

"Sale pending" sign

Single-family homes and condos that were flipped fell 4 percent in 2018, reaching 207,957 homes, according to ATTOM’s 2018 U.S. Home Flipping Report, released this week. Home flips comprised 5.6 percent of all single-family home and condo sales last year, the same as the year before. ATTOM Data Solutions defines a home flip as an arms-length transaction that occurs in the year where a previous arms-length sale on the same property occurred within the last 12 months.

Completed home flips returns in 2018 fell to a four-year low. Home flips averaged a gross profit (the difference between the median purchase price and the median flipped sales price) of $65,000—an average 44.8 percent return on investment. But that is down 3 percent from 2017, when the figure was $66,900.

“People are staying in their home longer,” says Todd Teta, chief product officer at ATTOM Data Solutions. “We have started to see a bit of flipping rate slowdown. However, this isn’t to say home flipping is going away. The market is still ripe with investors flipping and bargains await, especially at the lowest-priced areas of the country, where levels of financial distress remain highest.”

Among the 53 metro areas analyzed, those with the highest home flipping rates overall in 2018 were:

  • Memphis, Tenn.: 11.7%
  • Phoenix: 9.1%
  • Las Vegas: 8.7%
  • Tampa-St. Petersburg, Fla.: 8.2%
  • Birmingham, Ala.: 7.6%

Other metros among those with high flipping rates were Baltimore, St. Louis, Philadelphia, Orlando, Fla., and Nashville, Tenn.

Some markets saw notable increases in flipping rates in the fourth quarter of last year. The largest increases in home flipping were in Boston (up 33.3 percent), Tucson, Ariz. (up 27.3 percent), Raleigh, N.C. (up 24.5 percent), and Columbus, Ohio (13.1 percent), according to the report.

Home Flip Characteristics for 2018

  • Average time: Homes flipped in 2018 took an average of 180 days to complete, down from 181 days in 2017.
  • Square footage: The average square footage of homes flipped in the fourth quarter was 1,408, the smallest average square footage on record for CoreLogic’s report, dating back to the first quarter of 2005.
  • Financing: Thirty-six percent of all homes flipped in the fourth quarter were financed, down from 39.5 percent a year ago.
Source: 
U.S. Home Flipping Returns Drop to Seven-Year Low in 2018,” ATTOM Data Solutions (Feb. 26, 2019)