According to ATTOM’s third-quarter home flipping report, 94,766 single-family houses and condos in the were flipped in the third quarter. That represents 5.7 percent of all home sales in the third quarter, up from 5.1 percent in the second quarter and from 5.2 percent in the third quarter of 2020.
But the report also shows that typical raw profits remained below where they were a year ago, and profit margins dipped to their lowest point since early 2011.
The gross profit on typical flips was $68,847 in the third quarter, up 2.7 percent from the second quarter but down 1.6 percent year-over-year. The typical gross-flipping profit translated into a 32.3 percent ROI compared with the original acquisition price. That’s down from 33.2 percent in the second quarter and from 43.8 percent year-over-year to its lowest point since the first quarter of 2011.
“Home flipping produced another round of competing trends in the third quarter of this year as more investors got in on the action but got less out of it,” ATTOM Chief Product Officer Todd Teta said in a release. “It’s clear that declining fortunes weren’t enough to repel investors amid a typical scenario of 32 percent profits before expenses on deals that usually take an average of five months to complete. We will see over the coming months whether the amount they can make on these quick turnarounds will still be enough to keep luring them into the home-flipping business or start pushing them elsewhere.”
Home flips as a portion of all home sales increased from the second to third quarter in 142 of the 195 metro areas analyzed by ATTOM (73 percent). Among those areas, the most flippings were in Ogden, Utah, (9.5 percent of all home sales); Phoenix (9.5 percent); Salisbury, Md. (9.3 percent); Salt Lake City, (9.3 percent), and Laredo, Texas (9.2 percent).
Aside from Phoenix and Salt Lake City, the highest flipping rates during the third quarter in 53 metro areas with a population of 1 million or more were in Memphis, Tenn. (9 percent); Oklahoma City (8.8 percent) and Austin, Texas (8.5 percent).
The smallest home-flipping rates in the third quarter were in Honolulu (0.8 percent); Portland, Ore. (2.5 percent); Rochester, N.Y. (2.5 percent); Manchester, N.H. (2.7 percent) and Santa Rosa, Calif. (2.7 percent).
Profit margins dipped from the second to third quarter in 92 of the 195 metro areas analyzed (47 percent). The biggest declines came in Fargo, N.D. (ROI down from 196.5 percent to 107.2); Trenton, N.J. (down from 117.6 percent to 45 percent); Oklahoma City (down from 192.1 percent to 127.6 percent); Omaha, Neb. (down from 143.3 percent to 95.3 percent) and Macon, Ga. (down from 79.5 percent to 33.5 percent).
Markets with the largest ROI on typical home flips in the third quarter were Buffalo, N.Y. (ROI of 130.6 percent); Oklahoma City (127.6 percent); Florence, N.C. (125.8 percent); Pittsburgh (124.6 percent) and Scranton, Pa. (123.2 percent).
Aside from Buffalo, Oklahoma City and Pittsburgh, the largest investment returns in the third quarter among metro areas with a population of at least 1 million were in Baltimore (90.6 percent) and Philadelphia (88.7 percent).
Metro areas with the smallest profit margins on typical home flips in the third quarter were Laredo, Texas (7.5 percent return); Boise, Idaho (8 percent); Gulfport, Miss. (8.4 percent); Lubbock, Texas (10 percent) and Portland, Ore. (10.1 percent).
The highest raw profits on median-priced home flips were in San Jose, Calif. (typical gross profit of $213,000); Honolulu ($176,070); Fargo, N.D. ($166,458); Salisbury, Md. ($145,000); and Baltimore ($145,000).
The lowest raw profits on typical deals were in Gulfport, Miss. ($14,579 profit); Laredo, Texas ($15,281); Beaumont, Texas ($16,850); Lubbock, Texas ($17,725) and Huntington, W.V.-Ashland, Ky. ($18,400).