ATTOM Data Solutions, Irvine, California, on Thursday released its Q1 2019 U.S. Home Flipping Report, which shows that 49,059 U.S. single family homes and condos were flipped in the first quarter of 2019, down 2% from the previous quarter and down 8% from a year ago to a three-year low.
The 49,059 homes flipped in the first quarter represented 7.2% of all home sales during the quarter, up from 5.9% in the previous quarter and up from 6.7% 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% return on investment compared to the original acquisition price, down from a 42.5% average gross flipping ROI in Q4 2018 and down from an average gross flipping ROI of 48.6% 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% from last year. Therefore, if investors are seeing profit margins drop, they may be acting now and selling before price increases drop even more."
Eighty-five of 138 metropolitan statistical analyzed in the report (62%) posted a year-over-year increase in their home flipping rate in Q1 2019, including Columbus, Georgia (up 83%); Raleigh, North Carolina (up 73%); Charlotte, North Carolina (up 65%); McAllen-Edinburg, Texas (up 55%); and Milwaukee, Wisconsin (up 49%). 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%); Houston, Texas (up 41%); Atlanta, Georgia (up 38%); Pittsburgh, Pennsylvania (up 36%); and Minneapolis, Minnesota (up 33%). 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.
The total dollar volume of financed home flip purchases was $6.4 billion for homes flipped in the first quarter of 2019, up 35% 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% of homes flipped in Q1 2019, down from 39.5% in the previous quarter and down from 41.2% a year ago. Among 53 metropolitan statistical areas analyzed in the report with at least 1 million people, those with the highest%age of Q1 2019 completed flips purchased with financing were San Diego, California (56.0%); Seattle, Washington (52.5%); San Francisco, California (51.7%); Denver, Colorado (51.6%); and Boston, Massachusetts (51.3%).
Among the 138 metropolitan statistical areas analyzed in the report with at least 50 home flips completed in Q1 2019, those with the highest average gross flipping ROI were Pittsburgh, Pennsylvania (131.2%); Flint, Michigan (127.6%); Shreveport, Louisiana (112.5%); Scranton, Pennsylvania (112.0%); and Knoxville, Tennessee (105.0%). Along with Pittsburgh, Pennsylvania metro areas with a population of at least 1 million and an average gross flipping ROI of at least 79% were Cleveland, Ohio (100.0%); Philadelphia, Pennsylvania (100.0%); Buffalo, New York (89.7%); and Memphis, Tennessee (79.2%).
Homes flipped in the first quarter of 2019 were sold for a median price of $215,000, a gross flipping profit of $60,000above the median purchase price of $155,000, down from a gross flipping profit of $62,000 in the previous quarter and a gross flipping profit of $68,000 in Q1 2018 — to the lowest levels since Q1 2016. Of those 138 markets with at least 50 or more flips and a population greater than 200,000 in the first quarter of 2019, those that saw the lowest gross flipping profit were McAllen-Edinburg, Texas (profit of $8,752); Daphne, Alabama (profit of $15,761); Boise City, Idaho (profit of $18,332); Lexington, Kentucky (profit of $20,000); and San Antonio, Texas (profit of $23,596).
Homes flipped in Q1 2019 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. Among the 138 metro areas analyzed in the report, those with the shortest average days to flip were McAllen-Edinburg, Texas (127 days); Memphis, Tennessee (136 days); Raleigh, North Carolina (142 days); Mobile, Alabama (144 days); and Phoenix, Arizona (151 days). Metro areas with the longest average days to flip were Naples, Florida (235 days); Bridgeport, Connecticut (230 days); New Haven, Connecticut (225 days); Provo, Utah (219 days); and Hartford, Connecticut (219 days).
Of the 49,059 U.S. homes flipped in Q1 2019, 14.2% were sold by the flipper to a buyer using a loan backed by the Federal Housing Administration (FHA), up from 13.2% in the previous quarter but down from 15.2% a year ago. Among the 138 metro areas analyzed in the report, those with the highest%age of Q1 2019 home flips sold to FHA buyers — typically first-time homebuyers — were Worcester, Massachusetts (30.0%); Shreveport, Louisiana (29.0%); Modesto, California (27.3%); Hartford, Connecticut (27.2%); and Springfield, Massachusetts (27.0%).
Among 1,433 U.S. zip codes with at least 10 home flips in Q1 2019, there were eight zip codes where home flips accounted for more than 30% of all home sales, here are the top five: 93212 in Kings county, California (48.0%); 11433 in Queens county, New York (35.7%); 33147 Miami-Dade county, Florida (32.7%); 38115 in Shelby county, Tennessee (32.4%); and 92802 in Orange county, California (32.1%).
