Information from ATTOM Data Solutions shows that 49,059 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.
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 — the highest home flipping rate since Q1 2010.
Homes flipped in Q1 2019 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 in Q1 2018 to the lowest average gross flipping profit since Q1 2016.
The average gross flipping profit of $60,000 in Q1 2019 translated into an average 38.7 percent return on investment compared to the original acquisition price, down from a 42.5 percent average gross flipping ROI in Q4 2018 and down from an average gross flipping ROI of 48.6 percent in Q1 2018 to the lowest level since Q3 2011 — a nearly eight-year low.
“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,” said Todd Teta, chief product officer at ATTOM Data Solutions. “While the home flipping rate is increasing, gross profits and 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.”
Home flipping rate up from year ago in 62 percent of local markets
Eighty-five of 138 metropolitan statistical analyzed in the report (62 percent) posted a year-over-year increase in their home flipping rate in Q1 2019, including Columbus, Georgia (up 83 percent); Raleigh, North Carolina (up 73 percent); Charlotte, North Carolina (up 65 percent); McAllen-Edinburg, Texas (up 55 percent); and Milwaukee, Wisconsin (up 49 percent).
Along with Raleigh, Charlotte, and Milwaukee, other metro areas with a population of at least 1 million and a home flipping rate increasing in the double digits were San Antonio, Texas (up 47 percent); Houston, Texas (up 41 percent); Atlanta, Georgia (up 38 percent); Pittsburgh, Pennsylvania (up 36 percent); and Minneapolis, Minnesota (up 33 percent).
The number of homes flipped reached new peaks in Q1 2019 for Raleigh, North Carolina and San Antonio, Texas in the first quarter of 2019.
Home flip lending volume up 35 percent to 12-year high
The total dollar volume of financed home flip purchases was $6.4 billion for homes flipped in the first quarter of 2019, up 35 percent from $4.7 billion in Q1 2018 to the highest level since Q2 2007 — over a 12-year high. Flipped homes originally purchased by the investor with financing represented 37.5 percent of homes flipped in Q1 2019, down from 39.5 percent in the previous quarter and down from 41.2 percent a year ago.
Among 53 metropolitan statistical areas analyzed in the report with at least 1 million people, those with the highest percentage of Q1 2019 completed flips purchased with financing were San Diego, California (56.0 percent); Seattle, Washington (52.5 percent); San Francisco, California (51.7 percent); Denver, Colorado (51.6 percent); and Boston, Massachusetts (51.3 percent).