Slightly more than 49,000 U.S. single-family homes and condos were flipped in the first quarter of 2019, down 2 percent from the previous quarter and down 8 percent from a year ago to a three-year low, according to ATTOM Data Solutions’ Q1 2019 U.S. Home Flipping Report.
The 49,059 homes flipped in the first quarter represented 7.2 percent of all home sales during the quarter, up from 5.9 percent in the previous quarter and up from 6.7 percent a year ago, ATTOM found.
“With interest rates dropping and home price increases starting to ease, investors may be getting out while the getting is good, before the market softens further,” ATTOM Chief Product Officer Todd Teta said in a release. “While the home flipping rate is increasing, gross profits and [return on investment] (ROI) are starting to weaken and the number of investors that are flipping is down 11 percent from last year. Therefore, if investors are seeing profit margins drop, they may be acting now and selling before price increases drop even more.”
According to the report, homes flipped in the first quarter sold at an average gross profit of $60,000, down from an average gross flipping profit of $62,000 in the previous quarter and down from $68,000 one year ago to the lowest average gross flipping profit since Q1 2016.
The average gross flipping profit of $60,000 in the first quarter translated into an average 38.7 percent ROI compared to the original acquisition price, down from a 42.5 percent average gross flipping ROI in fourth quarter of 2018 and down from an average gross flipping ROI of 48.6 percent one year ago to the lowest level since Q3 2011 — a nearly eight-year low.
Sixty-two percent of the markets analyzed by ATTOM had year-over-year increases in their home flipping rate in the first quarter, including Columbus, Ga. (up 83 percent); Raleigh, N.C. (up 73 percent); Charlotte, N.C. (up 65 percent); McAllen-Edinburg, Texas (up 55 percent); and Milwaukee (up 49 percent).
Other markets with double-digit increases in flipping rates in the first quarter were San Antonio (up 47 percent); Houston (up 41 percent); Atlanta (up 38 percent); Pittsburgh (up 36 percent); and Minneapolis (up 33 percent).
ATTOM said the cities with the highest average gross flipping ROI in the first quarter were Pittsburgh (131.2 percent); Flint, Mich. (127.6 percent); Shreveport, La. (112.5 percent); Scranton, Pa. 112 percent); and Knoxville, Tenn. (105 percent).
The report identified the cities with the lowest average gross flipping ROI in the first quarter as McAllen-Edinburg, Texas ($8,752); Daphne, Ala. ($15,761); Boise City, Idaho ($18,332); Lexington, Ky. ($20,000); and San Antonio ($23,596).
Homes flipped in the first quarter took an average of 180 days to complete the flip, up from an average 175 days for homes flipped in Q4 2018 but down from 182 days a year ago.