Real Estate News

Hot Real Estate Alert: Home Flipping Hits 14-Year High

Written By: Jaymi Naciri
Monday, July 6, 2020

The newly >

The gross profit for home flips across the country also rose over the same time period, to 62,300. That was up slightly from 62,000 in the fourth quarter of 2019 and from 60,675 in the first quarter of last year, they said.

That 62,300 translated to a 36.7 percent return on investment, which is down from 39.5 percent in Q4 2019 and marks the lowest profit margin since the Q3 2011.

Home flipping has gradually taken up a larger portion of the housing market over the last couple of years, said Todd Teta, chief product officer at ATTOM Data Solutions. But profits are down and are lower than theyve been since the dark days following the Great Recession, which is a sign that investors arent keeping up with price increases in the broader market,nbsp;

Impact on local markets

Home flips as a percentage of real estate sales increased from the fourth quarter of 2019 to the first quarter of 2020 in 122 of the 140 metropolitan statistical areas analyzed in the report 87.1 percent, they said. The largest quarterly increases in home flipping rates came in Boston, MA up 80.2 percent; Springfield, MA up 76 percent; Olympia, WA up 73 percent; York, PA up 71.4 percent and Minneapolis, MN up 69.3 percent.

Interestingly, there were only four metros with a population of 1 million that experienced a decrease in annual flipping rates, and three of them were in Texas: San Antonio -12.9 percent; Austin -11.8 percent, and Houston down -0.6 percent. ; Oklahoma City was the fourth city, down 6.1 percent.

If youre looking to get in on the flipping trend, here are a few key pieces of info to consider:

You dont need to buy a million-dollar fixer. Homes flipped in the first quarter of 2020 were sold for a median price of 232,000.

Your profits will be larger where the home prices are higher. The highest first-quarter 2020 profits, measured in dollars, were concentrated in the West and Northeast. Among metro areas with enough data to analyze, 13 of the top 15 were in the those regions, led by San Francisco, CA gross profit of 171,000; San Jose, CA 165,000; Los Angeles, CA 145,000; New York, NY 141,899 and Honolulu, HI 140,190.

The lowest profits were generally in southern metro areas, such as Fort Collins, CO 14,000 profit; Springfield, MO 20,203; Daphne, AL 20,650; Raleigh, NC 21,250 and Durham, NC 25,000.

Dont think you have to turn the home around and sell it in 30 days. The average time to flip nationwide is 174 days.

You dont need to pay cash upfront for the home. Nationally, the percentage of flipped homes purchased with financing dipped in the first quarter of 2020 to 40.5 percent, from 44 percent in the fourth quarter of 2019 and 46.4 percent in the first quarter of 2019, to the lowest point since the fourth quarter of 2016. Meanwhile, 59.5 percent of homes flipped in the first quarter of 2020 were bought with all-cash, up from 56 percent in the prior quarter and 53.6 percent a year earlier.

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Monday, July 6, 2020

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