Dec 21

Home Flipping Drops Even as Profits Reach New Highs

Home Flipping Drops Even as Profits Reach New Highs

Fewer investors are taking on home flips during the pandemic. But many of those who’ve stayed with it are seeing profits rise.

The number of home flips dropped again in the third quarter, comprising only 5.1% of all home sales, ATTOM Data Solutions reports. Home flipping reflects a transaction in which the property is bought and sold within 12 months.

The gross profit on a typical home flip nationwide—which is the difference between the median sales price and the median paid by investors—increased to $73,766, the highest amount since at least 2000, ATTOM Data Solutions reports. That also is up significantly from $61,800 in gross profits recorded a year ago.

The markets seeing some of the highest home flipping profits in the third quarter compared to a year ago were Brownsville, Texas (return on investment up 182.9%); Austin, Texas (up 176.4%); Waco, Texas (up 157.4%); and Springfield, Mo. (up 145.3%), according to the report.

“Home-flipping again generated higher profits on less transactions across the United States in the third quarter of 2020 as investors continue to make more money on a declining number of deals,” says Todd Teta, chief product officer at ATTOM Data Solutions. “This all happened in the context of the pandemic, which has created unusual circumstances for the housing market to thrive, and that has included the home-flipping business. Too much is uncertain these days to say whether the latest trends will continue. But for now, the prospects continue looking up for home flipping after a period when they were trending the opposite way.”

Home flipping as a portion of sales was down in the third quarter in 93% of the 159 metro markets that ATTOM tracks. The largest quarterly decreases in the home flipping rate nationwide occurred in Killeen, Texas (where the rate was down 44.5%); Savannah, Ga. (down 43%); York, Pa. (down 42%); and Greeley, Colo. (down 41.5%).

On the other hand, the largest increases in home-flipping rates occurred in Davenport, Iowa (up 18.5%); Hilton Head, S.C. (up 16.8%); Scranton, Pa. (up 12.2%); Amarillo, Texas (up 10.9%); and Kalamazoo, Mich. (up 7.7%).

Some additional highlights from ATTOM Data Solutions’ latest report:

  • Homes flipped in the third quarter were sold for a median price of $240,000. The median investor purchase price was $166,234.
  • The highest home flipping profits measured in dollars tended to mainly be in the West and Northeast, led by San Jose, Calif.; Ventura, Calif; Los Angeles, Calif.; and San Francisco.
  • About 57% of homes flipped in the third quarter were purchased with all cash, up from 51% a year earlier.
  • Home flippers who sold in the third quarter took an average of 192 days to complete the transaction, which is the highest level since the third quarter of 2003, ATTOM Data Solutions reports.
Source:
ATTOM Data Solutions
©National Association of REALTORS®
Reprinted with permission

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