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Home Flipping Returns Drop

Home flippers are seeing smaller returns for their flips, according to some new data from…

  • December 20, 2017

Home flippers are seeing smaller returns for their flips, according to some new data from property database curator ATTOM Data Solutions.

ATTOM Data Solutions found that single family homes and condos flipped in the third quarter yielded an average gross flipping profit of $66,448 per flip, representing an average 47.7 percent return on investment for flippers.

That’s down from 48.7 percent in the previous quarter and down from 51.2 percent in Q3 2016 to the lowest average gross flipping ROI since Q2 2015.

The report also shows that 48,685 single family homes and condos were flipped nationwide in the third quarter, a home flipping rate of 5.1 percent — down from 5.6 percent in the previous quarter and unchanged from a year ago.

Year-to-date through the third quarter of 2017 a total of 153,727 single family homes and condos nationwide have been flipped, nearly equal with the 153,854 flipped through the first three quarters of 2016, when the number of homes flipped increased to a 10-year high.

“Home flipping profits continue to be squeezed by a dwindling inventory of distressed properties available to purchase at a discount and increasing competition from fair-weather home flippers often willing to operate on thinner margins,” said Daren Blomquist, senior vice president at ATTOM Data Solutions.

“A more than nine-year low in the ratio of flips per investor is evidence of this increased competition, which is pushing many investors to new metro areas that often have weaker market fundamentals but also come with a bigger supply of discounted distressed properties to flip,” Blomquist said.

The Home Flipping Rate Increases

The Q3 2017 home flipping rate increased from a year ago in 44 of the 93 metropolitan statistical areas analyzed in the report (47 percent), led by Baton Rouge, Louisiana (up 140 percent); Winston-Salem, North Carolina (up 58 percent); Salem, Oregon (up 51 percent); Indianapolis, Indiana (up 51 percent); and Buffalo, New York (up 47 percent).

Along with Indianapolis and Buffalo, metro areas with a population of 1 million or more that posted a year-over-year increase in home flipping rates of at least 10 percent were Louisville, Kentucky (up 22 percent); San Antonio, Texas (up 22 percent); New York, New York (up 21 percent); Cleveland, Ohio (up 17 percent); Birmingham, Alabama (up 17 percent) and Charlotte, North Carolina (up 15 percent).

Other major markets where the Q3 2017 home flipping rate decreased from a year ago included Seattle (down 8 percent), Minneapolis-St. Paul (down 18 percent); Tampa-St. Petersburg (down 9 percent); Baltimore (down 2 percent); and Denver (down 2 percent).

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