IRVINE, Calif. /PRNewswire/ — A total of 49,059 US single-family homes and condos were flipped in the first quarter of 2019, down 2 percent from the previous quarter and an 8 percent decrease from a year ago to a three-year low, according to a report ATTOM Data Solutions released Thursday,
But the properties flipped in the first quarter represented 7.2 percent of all home sales in that time period, up from 5.9 percent in the previous quarter and an increase of 6.7 percent a year ago — the highest home-flipping rate since the first quarter of 2010.
The homes sold at an average gross profit of $60,000, down $62,000 from the previous quarter to the lowest since the first quarter of 2016.
The average gross flipping profit of $60,000 in the first quarter of 2019 translated into an average 38.7 percent return on investment compared with the original acquisition price, down from a 42.5 percent average gross flipping ROI in the last quarter of 2018 to the lowest level since the third quarter of 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. ‘‘While the home-flipping rate is increasing, gross profits and return on investment 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.’’
Eighty-five of the 138 metros analyzed in the report, 62 percent posted a year-over-year increase in their home-flipping rate in the first quarter of 2019, including Columbus, Ga. (up 83 percent); Raleigh, N.C.(up 73 percent); Charlotte, N.C. (up 65 percent); McAllen-Edinburg, Texas (up 55 percent); and Milwaukee (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 (up 47 percent); Houstons (up 41 percent); Atlanta (up 38 percent); Pittsburgh (up 36 percent); and Minneapolis (up 33 percent).
Among the 53 metropolitan statistical areas analyzed in the report that have at least 1 million people, those with the highest percentage of quarter one 2019 completed flips purchased with financing were San Diego (56 percent); Seattle (52.5 percent); San Francisco (51.7 percent); Denver (51.6 percent); and Boston (51.3 percent).
Among the 138 metro areas analyzed in the report, those with the highest percentage of flips in the first quarter of 2019 that were sold to FHA buyers — typically first-time home buyers — were Worcester (30 percent); Shreveport, La. (29 percent); Modesto, Calif. (27.3 percent); Hartford (27.2 percent); and Springfield (27 percent).