U.S. Home Flipping Rate Plateaus In Q2 2017 As Average Flipping Returns Decline For Third Consecutive Quarter


For the report, a home flip is defined as a property that is sold in an arms-length sale for the second time within a 12-month period.

The report also shows an average gross flipping profit of $67,516 for homes flipped in the second quarter, representing a 48.4 percent return on investment (ROI) for flippers — down from 49.0 percent in the previous quarter and down from 49.6 percent in Q2 2016 to the lowest level since Q3 2015.

“Home flippers are employing a number of strategies to give them an edge in the increasingly competitive environment where flipping yields are being compressed,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “Many flippers are gravitating toward lower-priced areas where discounted purchases are more readily available. In markets where distressed discounts have largely dried up, flippers are showing more willingness to leverage financing when acquiring properties, often purchasing closer to full market value and then relying more heavily on price appreciation to fuel their flipping profits.”

Dollar volume of home flipper financing climbs to nearly 10-year high
More than 35 percent of homes flipped in Q2 2017 were purchased by the flipper with financing, up from 33.2 percent in the previous quarter and up from 32.3 percent a year ago to the highest level since Q3 2008.

The estimated total dollar volume of financing for homes flipped in the second quarter was $4.4 billion, up from $3.9 billion in the previous quarter and up from $3.4 billion a year ago to the highest level since Q3 2007.

Among 101 metropolitan statistical areas analyzed in the report, those with the highest percentage of Q2 2017 home flips purchased with financing by the flipper were Colorado Springs, Colorado (68.4 percent); Denver, Colorado (56.1 percent); Boston, Massachusetts (53.3 percent); Providence, Rhode Island (51.7 percent); and San Diego, California (49.0 percent).

“Across California the gross dollar profits available for property flips remains one of the highest in the country; however low market inventories, increases in home prices, and decreasing home affordability have decreased the number of opportunities available to secure prospective properties to invest,” said Michael Mahon, president at First Team Real Estate, covering the Southern California housing market.

Other markets in the top 10 for share of home flips purchased with financing were Seattle (49.0 percent) and Phoenix (46.6 percent).

“It is good to see the substantial drop in Seattle-area home flipping activity in the second quarter compared to the previous quarter, but the year-over-year growth is somewhat concerning,” said Matthew Gardner, chief economist at Windermere Real Estate, covering the Seattle market. “Home flipping can function to inflate home prices in a region, which as we saw in the run-up of the housing bubble, is not a good thing. That said, given the absolute number of flips relative to the total number of home sales (5.4 percent), it is not a huge cause for concern, at least not yet.”

Home flipping rate increases in 53 percent of local markets, counter to national trend
Counter to the national trend, 54 metropolitan statistical areas — 53 percent of the 101 metro areas analyzed in the report — posted a year-over-year increase in home flipping rates in the second quarter, led by Baton Rouge, Louisiana (up 72 percent); Rochester, New York (up 39 percent); DaphneFairhopeFoley, Alabama (up 29 percent); New York (up 24 percent); and Modesto, California (up 24 percent).

Read full report and methodology.

About ATTOM Data Solutions
ATTOM Data Solutions is the curator of the ATTOM Data Warehouse, a multi-sourced national property database that blends property tax, deed, mortgage, foreclosure, environmental risk, natural hazard, health hazards, neighborhood characteristics and other property characteristic data for more than 150 million U.S. residential and commercial properties. The ATTOM Data Warehouse delivers actionable data to businesses, consumers, government agencies, universities, policymakers and the media in multiple ways, including bulk file licenses, APIs and customized reports.

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SOURCE ATTOM Data Solutions

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