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| Todd Teta |
IRVINE, CA— ATTOM
Data Solutions, curator of the nation’s premier
property database and first property data provider of Data-as-a-Service
(DaaS), released its Q1 2019 U.S. Home Flipping Report, which shows that
49,059 U.S. single family homes and condos were flipped in the first quarter of
2019, down 2 percent from the previous quarter and down 8 percent from a year
ago to a three-year low.
Homes
flipped in Q1 2019 sold at an average gross profit of $60,000, down from an
average gross flipping profit of $62,000 in the previous quarter and down from
$68,000 in Q1 2018 to the lowest average gross flipping profit since Q1 2016.
The
average gross flipping profit of $60,000 in Q1 2019 translated into an average
38.7 percent return on investment compared to the original acquisition price,
down from a 42.5 percent average gross flipping ROI in Q4 2018 and down from an
average gross flipping ROI of 48.6 percent in Q1 2018 to the lowest level since
Q3 2011 — a nearly eight-year low.
“With
interest rates dropping and home price increases starting to ease, investors
may be getting out while the getting is good, before the market softens
further,” said Todd Teta, chief product officer at ATTOM Data Solutions.
“While the home flipping rate is increasing, gross profits and ROI are starting to weaken and the number of investors that are flipping is down 11 percent from last year.
"Therefore, if investors are seeing profit margins drop, they may be
acting now and selling before price increases drop even more.”
Home flipping rate up from year ago in 62 percent of local
markets
Eighty-five
of 138 metropolitan statistical analyzed in the report (62 percent) posted a
year-over-year increase in their home flipping rate in Q1 2019, including
Columbus, Georgia (up 83 percent); Raleigh, North Carolina (up 73 percent);
Charlotte, North Carolina (up 65 percent); McAllen-Edinburg, Texas (up 55
percent); and Milwaukee, Wisconsin (up 49 percent).
Along
with Raleigh, Charlotte, and Milwaukee, other metro areas with a population of
at least 1 million and a home flipping rate increasing in the double digits
were San Antonio, Texas (up 47 percent); Houston, Texas (up 41 percent);
Atlanta, Georgia (up 38 percent); Pittsburgh, Pennsylvania (up 36 percent); and
Minneapolis, Minnesota (up 33 percent).
The
number of homes flipped reached new peaks in Q1 2019 for Raleigh, North
Carolina and San Antonio, Texas in the first quarter of 2019.
Home
flip lending volume up 35 percent to 12-year high
The total dollar volume of financed home flip purchases was $6.4 billion for homes flipped in the first quarter of 2019, up 35 percent from $4.7 billion in Q1 2018 to the highest level since Q2 2007 — over a 12-year high.
Flipped
homes originally purchased by the investor with financing represented 37.5
percent of homes flipped in Q1 2019, down from 39.5 percent in the previous
quarter and down from 41.2 percent a year ago.
Among
53 metropolitan statistical areas analyzed in the report with at least 1
million people, those with the highest percentage of Q1 2019 completed flips
purchased with financing were San Diego, California (56.0 percent); Seattle,
Washington (52.5 percent); San Francisco, California (51.7 percent); Denver,
Colorado (51.6 percent); and Boston, Massachusetts (51.3 percent).
11
Markets where investors are doubling their ROI
Among
the 138 metropolitan statistical areas analyzed in the report with at least 50
home flips completed in Q1 2019, those with the highest average gross flipping
ROI were Pittsburgh, Pennsylvania (131.2 percent); Flint, Michigan (127.6
percent); Shreveport, Louisiana (112.5 percent); Scranton, Pennsylvania (112.0
percent); and Knoxville, Tennessee (105.0 percent).
Along with Pittsburgh, Pennsylvania metro areas with a population of at least 1 million and an average gross flipping ROI of at least 79 percent were Cleveland, Ohio (100.0 percent); Philadelphia, Pennsylvania (100.0 percent); Buffalo, New York (89.7 percent); and Memphis, Tennessee (79.2 percent).
Average home flipping returns continue to slip
Homes
flipped in the first quarter of 2019 were sold for a median price of $215,000,
a gross flipping profit of $60,000 above the median purchase price of $155,000,
down from a gross flipping profit of $62,000 in the previous quarter and a
gross flipping profit of $68,000 in Q1 2018 — to the lowest levels since Q1
2016.
Of those 138 markets with at least 50 or more flips and a population greater than 200,000 in the first quarter of 2019, those that saw the lowest gross flipping profit were McAllen-Edinburg, Texas (profit of $8,752); Daphne, Alabama (profit of $15,761); Boise City, Idaho (profit of $18,332); Lexington, Kentucky (profit of $20,000); and San Antonio, Texas (profit of $23,596).
Average
time to flip nationwide at 180 days
Homes
flipped in Q1 2019 took an average of 180 days to complete the flip, up from an
average 175 days for homes flipped in Q4 2018 but down from 182 days a year
ago.
Among the 138 metro areas analyzed in the report, those with the shortest average days to flip were McAllen-Edinburg, Texas (127 days); Memphis, Tennessee (136 days); Raleigh, North Carolina (142 days); Mobile, Alabama (144 days); and Phoenix, Arizona (151 days).
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