IRVINE, Calif., Dec. 12, 2019 /PRNewswire/ -- ATTOM Data
Solutions, curator of the nation's premier property database and
first property data provider of Data-as-a-Service (DaaS), today
released its third-quarter 2019 U.S. Home Flipping Report, which
shows that 56,566 U.S. single family homes and condos were flipped
in the third quarter of 2019, down 12.9 percent from the previous
quarter and down 6.8 percent from a year ago. After an unusually
lively flipping market in the spring of this year, the declines
stood out as the largest quarterly and annual drops since the third
quarter of 2014.
The homes flipped in the third quarter represented 5.4 percent
of all home sales during the quarter. That level was down from 6
percent of all home sales in the second quarter of 2019, but up
slightly from 5.2 percent a year ago.
Historical Home Flipping Trends Graph
Homes flipped in the third quarter of 2019 typically generated a
gross profit of $64,900 (the
difference between the median sales price and median paid by
investors), up 1.8 percent from the previous quarter and 3.5
percent from a year ago.
However, the typical gross flipping profit of $64,900 translated into a 40.6 percent return on
investment compared to the original acquisition price, down from a
41.1 percent gross flipping ROI in the second quarter of 2019 and
down from a margin of 43.5 percent in the third quarter of 2018.
The latest returns on home flips stood at the second-lowest point
since 2011, barely above the 40 percent ROI from the first quarter
of this year.
Historical Home Flipping Profit Trends Graph
"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," said 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 kinds of deals they were getting as
recently as last year. Those forces are keeping profits way down
from post-Recession highs and show no signs of easing."
Maksim Stavinsky, co-founder and
COO of Roc Capital noted that borrowers' declining profits on flips
are leading to much greater interest in renting out renovated
properties instead of flipping them.
"We have been seeing a decline in projected and realized profits
for borrowers on projects, despite the fact that borrower financing
costs have been meaningfully coming down," said Stavinsky. "This
has led to much greater interest and activity in our rental
programs. We expect these trends to continue."
Home flipping rates down in 78 percent of local
markets
Home flips as a portion of all home sales decreased
during the third quarter of 2019 from the previous quarter in 115
of the 147 metropolitan statistical areas analyzed in the report
(78 percent). The largest quarterly declines in the home flipping
rate came in Manchester, NH (down
40 percent); Reno, NV (down 33
percent); Salem, OR (down 31
percent); Clarksville, TN (down 31
percent) and Vallejo, CA (down 31
percent). Metro areas qualified for the report if they had a
population of at least 200,000 and at least 50 home flips in the
third quarter.
The biggest quarterly decreases in MSAs with at least a
population of 1 million or more were in Rochester, NY (down 29 percent); Grand Rapids, MI (down 25 percent);
Boston, MA (down 25 percent);
Providence, RI (down 24 percent)
and Milwaukee, WI (down 24
percent).
Home flips purchased with financing continue dropping while
those bought with cash climb
Nationally, the percentage of
flipped homes purchased with financing dipped in the third quarter
of 2019 to 41.5 percent, from 43.7 percent in the prior quarter and
46 percent a year ago. Meanwhile, 58.5 percent of homes flipped in
the third quarter of 2019 were bought with all-cash, up from 56.3
percent in the second quarter and 54 percent a year ago.
Among 53 metropolitan statistical areas analyzed in the report
with a population of 1 million or more, those with the highest
percentage of flips purchased with financing in the third quarter
included San Jose, CA (59.4
percent); Providence, RI (56.9
percent); Seattle, WA (56.0
percent); Boston, MA (54.9
percent) and San Diego, CA (53.4
percent).
Home flippers are doubling their money in eight
markets
Despite decreases in profit margins nationally,
eight MSAs analyzed in the report had third-quarter 2019 gross ROI
flipping margins of at least 100 percent: led by Pittsburgh, PA (132.6 percent); Scranton, PA (122.5 percent); Flint, MI (111.2 percent); Cleveland, OH (109.8 percent) and Hickory-Lenoir-Morganton,
NC (109.7 percent).
Typical home flipping returns remained near post-Recession
low points
Homes flipped in the third quarter of 2019 were
sold for a median price of $224,900,
with a gross flipping profit of $64,900 above the median purchase price of
$160,000. That profit figure was up
from a gross flipping profit of $63,750 in the previous quarter and up
$62,700 in the third quarter of 2018.
But with prices rising on investor-purchased homes, the median 40.6
percent return on investment was down from the post-Recession peak
of 52.1 percent in the second and third quarters of 2016.
Among the 53 markets with at least a population of 1 million or
more, those that saw the smallest gross flipping profits included
Raleigh, NC ($25,000); Austin,
TX ($27,549); Phoenix, AZ ($31,135); Las Vegas,
NV ($33,150) and Kansas City, MO ($39,141).
Average time to flip nationwide is 177 days
Home
flippers who sold homes in the third quarter of 2019 took an
average of 177 days to complete the flips, down from an average of
184 days for homes flipped in the second quarter, but the same as
the average for homes flipped a year earlier.
Among the 147 metro areas analyzed in the report, those with the
shortest average days to flip were Durham, NC (135 days); Raleigh, NC (138 days); Phoenix, AZ (138 days); Memphis, TN (142 days) and Birmingham, AL (146 days).
Metro areas with the longest average days to flip were
Provo, UT (226 days); Buffalo, NY (219 days); Asheville, NC (216 days); Gainesville, FL (216 days) and Boston, MA (215 days).
Flipped homes sold to FHA buyers increases from previous
quarter
Of the 56,566 U.S. homes flipped in the third
quarter of 2019, 14.5 percent were sold by the flippers to buyers
using a loan backed by the Federal Housing Administration (FHA), up
from 14.4 percent in the previous quarter but down from 12.1
percent a year ago.
Among the 147 metro areas in the report, those with the highest
percentage of Q3 2019 home flips sold to FHA buyers — typically
first-time homebuyers — were Stockton,
CA (37.3 percent); Visalia,
CA (34.3 percent); Ogden,
UT (34.0 percent); Lakeland,
FL (29.9 percent) and Corpus
Christi, TX (29.5 percent).
Twelve counties had a home flipping rate of at least 12
percent
Among 695 counties with at least 10 home flips in
the third quarter of 2019, there were 12 counties where home flips
accounted for at least 12 percent of all home sales. Here are the
top five: Fayette County, PA, in
the Pittsburgh metro area (17.9
percent); Cameron County, TX, in
the Brownsville metro area (15.5
percent); Portsmouth City/County,
VA, in the Virginia Beach metro
area (13.5 percent); Kings County,
CA, in the Hanford-Corcoran metro area (13.2 percent) and
Rockingham County, VA, in the
Harrisonburg metro area (13.1
percent).
Ten zip codes had a home flipping rate of at least 25
percent
Among 1,684 U.S. zip codes with at least 10 home
flips in the third quarter of 2019, there were 10 zip codes where
home flips accounted for at least 25 percent of all home sales.
Here are the top five: 35005 in Jefferson
County, AL (38.3 percent); 93212 in Kings County, CA (37.9 percent); 78537 in
Hidalgo County, TX (31.3 percent);
33147 in Miami-Dade County, FL
(28.1 percent) and 08046 in Burlington
County, NJ (27.0 percent).
Report methodology
ATTOM Data Solutions analyzed sales
deed data for this report. A single-family home or condo flip was
any arms-length transaction that occurred in the quarter where a
previous arms-length transaction on the same property had occurred
within the last 12 months. The average gross flipping profit is the
difference between the purchase price and the flipped price (not
including rehab costs and other expenses incurred, which flipping
veterans estimate typically run between 20 percent and 33 percent
of the property's after repair value). Gross flipping return on
investment was calculated by dividing the gross flipping profit by
the first sale (purchase) price.
About ATTOM Data Solutions
ATTOM Data Solutions
provides premium property data to power products that improve
transparency, innovation, efficiency and disruption in a
data-driven economy. ATTOM multi-sources property tax, deed,
mortgage, foreclosure, environmental risk, natural hazard, and
neighborhood data for more than 155 million U.S. residential and
commercial properties covering 99 percent of the nation's
population. A rigorous data management process involving more than
20 steps validates, standardizes and enhances the data collected by
ATTOM, assigning each property record with a persistent, unique ID
— the ATTOM ID. The 9TB ATTOM Data Warehouse fuels innovation in
many industries including mortgage, real estate, insurance,
marketing, government and more through flexible data delivery
solutions that include bulk file licenses, APIs, real estate market
trends, marketing lists, match & append and introducing the
first property data delivery solution, a cloud-based data platform
that streamlines data management – Data-as-a-Service (DaaS).
Media Contact:
Christine
Stricker
949.748.8428
christine.stricker@attomdata.com
Data and Report Licensing:
949.502.8313
datareports@attomdata.com
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SOURCE ATTOM Data Solutions