The number of houses being flipped on the real estate market is at its highest rate since 2010, according to a recent report by ATTOM Data Solutions. The findings note that although overall housing sales have remained slow, those for flipped homes have been on the rise.
House Flipping Stats
The study, which focused on the United States market, found the house flipping rate increased from 5.9% to 7.2% in the first quarter of 2019. That worked out to 49,059 single-family homes and condos flipped across the country.
Overall, $6.4 billion was made in home flip purchases in the first quarter of 2019, up from $4.7 billion in Q1 of 2018.
The research found that while the number of homes being flipped was on the rise, the gross profits were not. In 2019, the average house flipper earned just $60,000 in gross profits on the property while they earned $62,000 in the previous quarter and $68,000 a year ago. It worked out to a 38.7% return on investment (ROI).
ATTOM Chief Product Officer Todd Teta noted:
“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.”
ATTOM reported that during the first quarter of 2019, it took homes an average of 180 days to be flipped. That is up from 175 days in Q4 2018, but down from a year ago when the average time span was 182 days.
Top Markets for House Flipping
Over 60% of metropolitan areas reported an increase in house flipping rates over last year. Those who saw the biggest surges include Columbus, Georgia (83% rise); Raleigh, NC (73% rise); Charlotte, NC (65% rise); McAllen-Edinburg, TX (55% rise); and Milwaukee, WI (49% rise).
The markets with the highest flipping rates, according to ATTOM are:
- Memphis, TN-MS-AR (13%)
- Huntsville, AL (11.4%)
- Phoenix-Mesa-Scottsdale, AZ (11.4%)
- Atlantic City-Hammonton, NJ (11.1%)
- Las Vegas-Henderson-Paradise, NV (10.9%)
- Durham-Chapel Hill, NC (10.6%)
- Raleigh, NC (10.3%)
- Charlotte-Concord-Gastonia, NC-SC (10.2%)
- Tampa-St. Petersburg-Clearwater, FL (10.1%)
- Clarksville, TN-KY (10%)
In addition, researchers released the zip codes of areas where house flips represented more than 30% of all home sales. Among the top five were 93212 in Kings County, CA, 11433 in Queens, NY, 33147 in Miami-Dade County, FL, 38115 in Shelby County, TN, and 92802 in Orange County, CA.
Tips for House Flipping
According to USA Today, there are some things that would-be house flippers can do to improve their earnings:
- Research. Know your real estate market or find an agent who can help. Most deals are found off-market and being able to access these spaces is key.
- Strategy. Set a budget and timeline for your flipping project. An important factor is to plan for repairs or renovations and work that into the purchase price. Also, don’t forget to keep in mind the taxes that may need to be paid on the earnings for the property.
Jerryll Noorden, a former NASA robotics research scientist who now flips homes noted:
“People lose money on closing costs, money-lending costs, seller’s agent commissions, holding costs, contingency costs, utilities, construction and rehab costs, and more. In order to account for these costs, you have to buy the house at the right price.”