In yet another sign of a slowdown in the national housing market, the number of homes that were flipped — sold within one year of purchase — declined by 12 percent during the third quarter of 2018, compared with the third quarter of 2017, according to a new report by ATTOM Data Solutions, an Irvine, Calif.-based property database. The U.S. Home Flipping Report shows that 45,901 single-family homes and condos that sold during the third quarter were flips, which is the lowest level since the first quarter of 2015.
The number of sales that were considered flips during the quarter represent 5 percent of all sales, down slightly from 5.1 percent during the third quarter of 2017.
ATTOM’s quarterly reports have now recorded three consecutive quarters with a decline in flips, which hasn’t happened since 2014, according to Daren Blomquist, ATTOM’s senior vice president, which followed a jump in mortgage rates during the second half of 2013. In the years leading up to the housing crash, 11 consecutive quarters (from the second quarter of 2006 to the fourth quarter of 2008) had declines in flipping activity.
The combination of high home prices, low inventory and higher mortgage rates are contributors to the slowdown in home flipping. In addition, the average returns on home flipping dropped to a 6.5-year low during the third quarter of 2018, at an average of 42.6 percent, down from 48.1 percent during the third quarter of 2017.
Homes sold for an average of $63,000 more than what the flipper paid during the third quarter of 2018, compared with $65,000 during that same period in 2017. ATTOM’s calculations are based solely on purchase prices and sales prices and don’t include renovation costs or other expenses, which are estimated to be 20 to 33 percent of the property’s value after repairs.
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Link to full report here.
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