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St. Mary's Credit Union BlogU.S. Home Flipping Returns Drop to Seven-Year Low In 2018

U.S. Home Flipping Returns Drop to Seven-Year Low In 2018

House Flopping FNL

Is the golden age of home flipping coming to an end? It looks like activity is up but profits are down, overall.

Property database curator ATTOM Data Solutions just released its Q4 and Year-End 2018 U.S. Home Flipping Report, which shows that 207,957 U.S. single family homes and condos were flipped in 2018, down 4 percent from the 216,537 home flips in 2017.

The 207,957 homes flipped in 2018 represented 5.6 percent of all single-family home and condo sales during the year, stagnant from 5.6 percent of all sales in 2017 but up from 5.1 percent of all sales back in 2008.

Home flip lending volume up 8 percent to 11-year high

The total dollar volume of financed home flip purchases was $19.9 billion for homes flipped in 2018, up 8 percent from $18.5 billion in 2017 to the highest level since 2007 — an 11-year high.

2018 Year-End Home Flipping Financing Trends

Flipped homes originally purchased by the investor with financing represented 39.1 percent of homes flipped in 2018, down from 39.4 percent in 2017 and down from 41.0 percent in 2008.

Among 53 metropolitan statistical areas analyzed in the report with at least 1 million people, those with the highest percentage of 2018 completed flips purchased with financing were Denver, Colorado (53.7 percent); Providence, Rhode Island (51.8 percent); Seattle, Washington (51.8 percent); San Diego, California (51.6 percent); and San Francisco, California (50.8 percent).

Share of flips sold to FHA buyers at an 11-year low

Of the homes flipped in 2018, 13.8 percent were sold to FHA borrowers — likely first-time homebuyers — down from 17 percent in 2017 to an 11-year low.

Average home flipping returns drop to a four-year low

Completed home flips in 2018 yielded an average gross profit of $65,000 (difference between median purchase price and median flipped sale price), down 3 percent from an average gross flipping profit of $66,900 in 2017.

2018 Year-End Home Flipping Gross Profits and Returns

The average gross flipping profit of $65,000 in 2018 represented an average 44.8 percent return on investment (percentage of original purchase price), down from 50.3 percent in 2017 and down from an all-time high average gross flipping ROI of 51.0 percent in 2016.

Highest home flipping rates in Memphis, Phoenix, Las Vegas, Tampa, Birmingham

Among 53 metro areas analyzed in the report with at least 1 million people, those with the highest home flipping rate in 2018 were Memphis, Tennessee (11.7 percent); Phoenix, Arizona (9.1 percent); Las Vegas, Nevada (8.7 percent); Tampa-St. Petersburg, Florida (8.2 percent); Birmingham, Alabama (7.6 percent).

Other major markets in the top 10 for highest 2018 home flipping rate were Baltimore, Maryland; St. Louis, Missouri; Philadelphia, Pennsylvania; Orlando, Florida; and Nashville, Tennessee.

Biggest increase in home flipping rates in Boston, Tucson, Raleigh, Columbus, Hartford

Among metro areas with at least 1 million people, those with the biggest annual increase in home flipping rate in 2018 were Boston, Massachusetts (up 33.3 percent); Tucson, Arizona (up 27.3 percent); Raleigh, North Carolina (up 24.5 percent); Columbus, Ohio (up 13.1 percent); and Hartford, Connecticut (up 12.8 percent).

Other major markets in the top 10 for biggest increase in home flipping rate in 2018 were New York, New York; Charlotte, North Carolina; Grand Rapids, Michigan, Pittsburgh, Pennsylvania and Milwaukee, Wisconsin.

Average time to flip down slightly from 2017

Homes flipped in 2018 took an average of 180 days to complete the flip, down from 181 days in 2017 but up from 159 average days to flip 10-years ago.

Find out more at attomdata.com.

 

 

 

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