Average Home Flipping Returns Drop to 6.5-Year Low; Share of Flips Sold to FHA Buyers at a More Than 10-Year Low; Share of Home Flips Purchased with Financing Decreases From 10-Year High in Q2 2018
IRVINE, Calif., Dec. 6, 2018 /PRNewswire/ — ATTOM Data Solutions, curator of the nation’s premier property database, today released its Q3 2018 U.S. Home Flipping Report, which shows that a total of 45,901 U.S. single family homes and condos were flipped in the third quarter of 2018, down 12 percent from a year ago to the lowest level since Q1 2015 — a 3.5-year low.
Homes flipped in Q3 2018 represented 5.0 percent of all single family home and condo sales during the quarter — down from a 5.2 percent home flipping rate in Q2 2018 and down from a 5.1 percent home flipping rate in Q3 2017 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 at ATTOM Data Solutions. “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.”
Average home flipping returns drop to 6.5-year low
Homes flipped in Q3 2018 sold for an average of $63,000 more than what the home flipper purchased them for, down from an all-time high 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 average gross flipping profit of $63,000 in Q3 2018 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 — a 6.5-year low.
Nearly one-third of home flips sold for $100,000 to $200,000
The share of homes flipped that were sold by the home flipper between $100,000 to $200,000 made up 31.6 percent of all flipped sales, while those flip sales that occurred on homes sold for more than $5 million saw the highest gross flipping return on investment (ROI) of any price range.
Sales Price Range
Share of Total Home Flips
$50K – $100K
$100K – $200K
$200K – $300K
$300K – $400K
$400K – $500K
$500K – $750K
$750K – $1M
$1M – $2M
$2M – $5M
Highest gross flipping returns in Pennsylvania, Ohio and Kentucky
States with the highest average gross flipping ROI in Q3 2018 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 with at least 50 flips in Q3 2018 and a population of at least 200,000, those with the highest average gross flipping ROI in Q3 2018 were Pittsburgh, Pennsylvania (136.7 percent); Cleveland, Ohio(120.2 percent); Atlantic City, New Jersey (110.3 percent); Scranton, Pennsylvania (109.0 percent); and Philadelphia, Pennsylvania (107.9 percent).
Among 1,264 U.S. zip codes analyzed in the report with at least 10 flips during the quarter, those with the highest average gross flipping ROI in Q3 2018 were 33993 in Cape Coral, Florida (881.0 percent); 41091 in Cincinnati, Ohio (631.0 percent); 40356 in Lexington, Kentucky (421.1 percent); and 21216 (410.4 percent) and 21218 (357.1 percent), both in Baltimore, Maryland.
Highest home flipping rates in Arizona, Tennessee and Nevada
Arizona had the highest home flipping rate among all states in Q3 2018 (7.7 percent), followed by Tennessee (7.5 percent), Nevada (7.2 percent), Alabama (6.6 percent), and Maryland (6.0 percent).
Among 133 metropolitan statistical areas with at least 50 flips in Q3 2018 and a population of at least 200,000, those with the highest home flipping rate for the quarter were Memphis, Tennessee (10.4 percent); Atlantic City, New Jersey(9.1 percent); Phoenix, Arizona (8.6 percent); Las Vegas, Nevada (7.8 percent) and Huntsville, Alabama (7.5 percent).
Among 1,264 U.S. zip codes analyzed in the report with at least 10 flips during the quarter, those with the highest home flipping rate were 38115 in Memphis, Tennessee (28.1 percent); 33142 in Miami, Florida (27.3 percent); 11717 in Brentwood, New York (27.1 percent); 75224 in Dallas, Texas (26.8 percent); and 11436 in the county of Queens, New York (25.6 percent).
Share of flipped homes purchased with financing dips slightly
Homes flipped in Q3 2018 that were originally purchased with financing by the home flipper represented 38.8 percent of all homes flipped during the quarter, down from 40.7 percent in the previous quarter and down from 39.2 percent a year ago.
States where the percent of flips that were purchased with financing in the third quarter of 2018 that were well above the national average of 38.8 percent included; the District of Columbia (67.2 percent), Colorado (55.7 percent), Minnesota(52.1 percent), New Hampshire (52.0 percent) and Rhode Island (49.2 percent).
Among 133 metropolitan statistical areas with at least 50 flips in Q3 2018 and a population of at least 200,000, those with the highest percent of home flip sales purchased with financing in Q3 2018 were Madison, Wisconsin (62.5 percent); Colorado Springs, Colorado (62.2 percent); Cedar Rapids, Iowa (60.4 percent) Manchester, New Hampshire (57.6 percent) and Greeley, Colorado (56.9 percent).
Share of flips sold to FHA buyers at a 10-year low
Of the homes flipped in Q3 2018, 12.7 percent were sold to buyers using loans backed by the Federal Housing Administration (FHA) — likely first-time homebuyers — down from 16.1 percent in Q3 2017 to a 10-year low.
Among 53 metro areas analyzed in the report with at least 1 million people, those with the smallest share of completed flips sold to FHA buyers in Q3 2018 were San Jose, California (1.5 percent); Raleigh, North Carolina (3.8 percent); Las Vegas, Nevada (5.1 percent); San Francisco, California (5.7 percent); and Memphis, Tennessee (5.8 percent).
Among the 53 metro areas analyzed in the report with at least 1 million people, those with the highest share of completed flips sold to FHA buyers in Q3 2018 were Riverside, California (24.3 percent); Baltimore, Maryland (23.0 percent); Chicago, Illinois (21.1 percent); Philadelphia, Pennsylvania (20.5 percent); and San Antonio, Texas (20.2 percent).
Other high-level report takeaways
- The median year built of homes flipped in Q3 2018 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 Q3 2018 was 1,408, the smallest median square footage as far back as data is available — Q1 2000.
- A total of 37,905 entities flipped properties in Q3 2018, a ratio of 1.21 flips per entity, the lowest ratio of flips per entity since Q4 2007 — a nearly 11-year low.
- The average time to complete a home flip was 179 days, down from 185 days in the previous quarter, and down from 180 days in Q3 2017.
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, market trends, marketing lists, match & append and more.
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