Homes flipped in the second quarter of 2018 yielded an average gross return on investment (ROI) of 44.3 percent, down from 47.8 percent in the previous quarter and down from 50 percent one year ago, according to ATTOM Data Solutions’ Q2 2018 U.S. Home Flipping Report.
ATTOM said the home flipping ROI in the second quarter was the lowest since the third quarter of 2014.
“Fewer distressed sales are limiting the ability of home flippers to find deep discounts even while rising interest rates are shrinking the pool of potential buyers for flipped homes,” ATTOM Senior Vice President Daren Blomquist said in a release. “These two forces are squeezing average home flipping returns, pushing investors to leverage financing or migrate to markets with more distressed discounts available to achieve more favorable returns.”
During the quarter, 48,768 U.S. single-family homes and condos were flipped, a home flipping rate of 5.2 percent of all sales — down from a 6.6 percent home flipping rate in the previous quarter and down from a 5.4 percent home flipping rate one year ago, the report found.
Homes flipped during the quarter sold for an average of $65,520 more than purchase price, down from an all-time high average gross flipping profit of $69,500 in the first quarter and down from an average gross flipping profit of $69,000 a year ago, according to the report.
The states with the highest average gross flipping ROI during the second quarter were Louisiana (102.5 percent); Pennsylvania (100.3 percent); Ohio (81.4 percent); Maryland (76.1 percent); and Tennessee (74.9 percent), ATTOM found.
The metropolitan statistical areas (MSAs) with a with the highest average gross flipping ROI in the second quarter were Pittsburgh (162.7 percent); Hickory-Lenoir-Morganton, N.C. (129 percent); Mobile, Ala. (126.6 percent); Buffalo, N.Y. (107.5 percent); and Baton Rouge, La. (107.1 percent), the report said.
States with the highest home flipping rates during the second quarter were the District of Columbia (8.3 percent); Nevada (7.4 percent); Tennessee (7.2 percent); Arizona (6.7 percent); Maryland (6.5 percent); and Alabama (6.4 percent), the report found.
ATTOM said the MSAs with the highest home flipping rates for the quarter were Memphis, Tenn. (9.7 percent); Clarksville, Tenn. (8.2 percent); Atlantic City (7.9 percent); York, Pa. (7.7 percent); and Las Vegas (7.7 percent).
The average time to complete a home flip during the second quarter was 186 days, up from 182 days in the previous quarter and 185 days a year ago.