Home Flipping Is Losing Fans
December 17, 2019
Home flipping plunged 12.9% in the third quarter of this year, following an unusually active spring, according to ATTOM Data Solutions’ latest U.S. Home Flipping Report. In the third quarter, 56,566 single-family homes and condos were flipped, down 6.8% from a year ago. This marks the largest quarterly and annual drops in home flipping activity since the third quarter of 2014.
“After a springtime selling binge earlier this year, the home flipping business settled way down over the summer amid a continuing scenario of languishing profits,” says Todd Teta, chief product officer at ATTOM Data Solutions. “The retreat back to more normal levels of sales comes amid broader market forces that are making it harder and harder for investors to complete the kind of deals they were getting as recently as last year. Those forces are keeping profits way down from postrecession highs and show no signs of easing.”
The typical gross flipping profit (the difference between the median sales price and the median paid by investors) fell in the third quarter. ATTOM researchers determined it was $64,900, or a 40.6% return on investment, compared with the original purchase price, down from a margin of 43.5% in the third quarter of 2018. That is the second lowest return on home flips since 2011.
Overall, flipped homes comprised 5.4% of all home sales during the third quarter. Home flipping rates fell in 78% of the 147 metro areas tracked. The largest quarterly declines in the home flipping rate were in Manchester, N.H. (down 40%); Reno, Nev. (down 33%); Salem, Ore. (down 31%); Clarksville, Tenn. (down 31%); and Vallejo, Calif. (down 31%).
On the other hand, home flipping was hot in some areas. Home flippers doubled their money in eight markets during the third quarter, led by Pittsburgh (132.6% increase in gross ROI flipping margins); Scranton, Penn. (122.5% increase); Flint, Mich. (111.2% increase); Cleveland (109.8% increase); and Hickory-Lenoir-Morganton, N.C. (109.7% increase).
Updated: February 21, 2020