Slightly more than 56,000 U.S. single-family homes and condos were flipped in the third quarter of 2019, down 12.9 percent from the previous quarter and down 6.8 percent from a year ago, according to ATTOM Data Solutions.
ATTOM said the number of homes and condos flipped in the third quarter represented the largest quarterly and annual drops since the third quarter of 2014.
During the quarter, the homes flipped represented 5.4 percent of all home sales during the quarter, down from 6 percent of all home sales in the second quarter of 2019, but up slightly from 5.2 percent a year ago.
“After a springtime selling binge earlier this year, the home-flipping business settled way down over the summer amid a continuing scenario of languishing profits,” ATTOM Chief Product Officer Todd Teta said in a release.
“The retreat back to more normal levels of sales comes amid broader market forces that are making it harder and harder for investors to complete the kinds of deals they were getting as recently as last year,” Teta said. “Those forces are keeping profits way down from post-Recession highs and show no signs of easing.”
According to the report, homes flipped in the third quarter generated a gross profit of $64,900, up 1.8 percent from the previous quarter and 3.5 percent from a year ago. ATTOM said that gross profit translated into a 40.6 percent return on investment compared to the original acquisition price, down from a 41.1 percent gross flipping ROI in the second quarter of 2019 and down from a margin of 43.5 percent in the third quarter of 2018.
Home flips as a portion of all home sales decreased during the third quarter from the previous quarter in 78 percent of the metropolitan statistical areas analyzed.
ATTOM said the largest quarterly declines in the home flipping rate came in the third quarter were in Manchester, N.H. (down 40 percent); Reno, Nev. (down 33 percent); Salem, Ore. (down 31 percent); Clarksville, Tenn.(down 31 percent); and Vallejo, Calif. (down 31 percent).
ATTOM said eight markets had third-quarter gross ROI flipping margins of at least 100 percent. They led by Pittsburgh(132.6 percent); Scranton, Pa.(122.5 percent); Flint, Mich. (111.2 percent); Cleveland (109.8 percent); and Hickory-Lenoir-Morganton, N.C. (109.7 percent).