3Q Home Flipping Falls to Nearly 4-Year Low
ATTOM Data Solutions, Irvine, Calif., said U.S. home flipping fell by 12 percent in the third quarter to the lowest level since 2015.
The company’s Q3 2018 U.S. Home Flipping Report reported 45,901 U.S. single-family homes and condos flipped, representing 5 percent of all single-family home and condo sales during the quarter, down from 5.2 percent in the second quarter and down from 5.1 percent a year ago to the lowest level since Q3 2016.
“Home flipping acts as a canary in the coal mine for a cooling housing market because the high velocity of transactions provides home flippers with some of the best and most real-time data on how the market is trending,” said Daren Blomquist, senior vice president with ATTOM. “We’ve now seen three consecutive quarters with year-over-year decreases in home flips. The last time that happened was in 2014 following the mortgage rate jump in the second half of 2013, but it’s still far from the 11 consecutive quarters with year-over-year decreases in home flips extending from Q2 2006 through Q4 2008 and leading up to the last housing crash.”
ATTOM said homes flipped in the third quarter sold for an average of $63,000 more than what the home flipper purchased, down from a record average gross flipping profit of $68,000 in the first quarter and down from an average gross flipping profit of $65,000 a year ago to the lowest level since Q2 2016. The third quarter profit represented an average 42.6 percent gross flipping return on investment, down from an average 44.1 percent gross flipping ROI in the previous quarter and down from an average 48.1 percent gross flipping ROI in Q3 2017 to the lowest level since Q1 2012.
The report said states with the highest average gross flipping ROI in the third quarter were Pennsylvania (96.7 percent), Ohio (90.4 percent), Kentucky (84.7 percent), Louisiana (82.4 percent), and Michigan (78.6 percent). Among 133 metropolitan statistical areas highest average gross flipping ROI in the third quarter were Pittsburgh (136.7 percent); Cleveland (120.2 percent); Atlantic City, N.J. (110.3 percent); Scranton, Pa. (109.0 percent); and Philadelphia (107.9 percent).
Arizona had the highest home flipping rate among all states in the third quarter (7.7 percent), followed by Tennessee (7.5 percent), Nevada (7.2 percent), Alabama (6.6 percent), and Maryland (6.0 percent). Among metros, those with the highest home flipping rate for the quarter were Memphis (10.4 percent); Atlantic City (9.1 percent); Phoenix (8.6 percent); Las Vegas (7.8 percent) and Huntsville, Ala. (7.5 percent).
Other report takeaways:
–The median year built of homes flipped in the third quarter was 1978, the third consecutive quarter for the oldest median year built as far back as data is available (Q1 2000).
–The median square footage of homes flipped in the third quarter was 1,408, the smallest median square footage as far back as data is available.
–37,905 entities flipped properties in the third quater, a ratio of 1.21 flips per entity, the lowest ratio of flips per entity since Q4 2007.
–Average time to complete a home flip was 179 days, down from 185 days in the previous quarter, and down from 180 days a year ago.
