Home Flipping Falls to 7-Year Low in 2018
ATTOM Data Solutions, Irvine, Calif., said home flipping activity fell in 2018 by nearly 4 percent from a year earlier to its lowest level since 2011.
The company’s Q4 and Year-End 2018 U.S. Home Flipping Report showed 207,957 U.S. single family homes and condos flipped in 2018, down 4 percent from the 216,537 home flips in 2017. The total represented 5.6 percent of all single-family home and condo sales during the year, stagnant from 5.6 percent of all sales in 2017 but up from 5.1 percent of all sales back in 2008.
The report said 146,020 entities (individuals and institutions) flipped homes in 2018, down .4 percent from the 146,623 entities that flipped in 2017 but up 63.1 percent from 89,539 entities that flipped 10 years ago.
“With mortgage rates remaining strong and people staying in their homes longer, we have started to see a bit of a flipping rate slowdown,” said Todd Teta, chief product officer with ATTOM Data Solutions. “However, this isn’t to say home flipping is going away. The market is still ripe with investors flipping and bargains still await, especially in the lowest-priced areas of the country, where levels of financial distress remain highest.”
The report said total dollar volume of financed home flip purchases grew to $19.9 billion in 2018, up 8 percent from $18.5 billion in 2017 to the highest level since 2007.
Other report data:
–Flipped homes originally purchased by the investor with financing represented 39.1 percent of homes flipped in 2018, down from 39.4 percent in 2017 and down from 41.0 percent in 2008. Among 53 metropolitan statistical areas analyzed in the report with at least 1 million people, those with the highest percentage of 2018 completed flips purchased with financing were Denver (53.7 percent); Providence, R.I. (51.8 percent); Seattle (51.8 percent); San Diego (51.6 percent); and San Francisco (50.8 percent).
–Of homes flipped in 2018, 13.8 percent were sold to FHA borrowers, downn from 17 percent in 2017 to an 11-year low.
–Completed home flips in 2018 yielded an average gross profit of $65,000 (difference between median purchase price and median flipped sale price), down 3 percent from an average gross flipping profit of $66,900 in 2017.
–The average gross flipping profit of $65,000 in 2018 represented an average 44.8 percent return on investment (percentage of original purchase price), down from 50.3 percent in 2017 and down from a record high average gross flipping ROI of 51.0 percent in 2016.
–Among metro areas analyzed in the report with at least 1 million people, those with the highest home flipping rate in 2018 were Memphis, Tenn. (11.7 percent); Phoenix (9.1 percent); Las Vegas (8.7 percent); Tampa-St. Petersburg (8.2 percent); and Birmingham, Ala. (7.6 percent).
–Homes flipped in 2018 took an average of 180 days to complete the flip, down from 181 days in 2017 but up from 159 average days to flip 10-years ago.
–The 47,071 home flips in the fourth quarter were completed by 37,379 investors, a ratio of 1.26 flips per investor.
–The share of homes flipped in the fourth quarter that were purchased by the flipper with financing represented 36.4 percent of all homes flipped in the quarter, down from 39.1 percent in the previous quarter and down from 39.5 percent in Q4 2017, to a two-year low.
–The average gross flipping profit of home flips in the fourth quarter was $62,000, an average 41.9 percent return on investment (percentage of original purchase price), down from 42.9 percent last quarter and down from 49.6 percent in Q4 2017, to a seven-year low.
–The average square footage of homes flipped in the fourth quarter was 1,408, down from 1,412 in the previous quarter to the smallest average square footage on record for the report, going back to Q1 2005.
–Homes flips completed in the fourth quarter took an average of 175 days, down from 177 days in the previous quarter and down from 178 days in Q4 2017.
