Flipping Flop? Fix-and-Flip Deals Decline in Rates, Returns
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Flipping Flop? Fix-and-Flip Deals Decline in Rates, Returns

fix-and-flip deals, flipping

“With mortgage rates remaining strong and people staying in their homes longer, we have started to see a bit of a flipping rate slowdown." - ATTOM chief product officer Todd Teta

Returns and sales for single-family and condo flipping are struggling, according to a new report from ATTOM Data Solutions.

207,957 single-family homes and condos were flipped in 2018, down about 4 percent from 216,537 flips in 2017, according to ATTOM’s U.S. Home Flipping Report. Flips comprised about on 5.6 percent of all single-family home and condo sales in 2018, which remained stagnant from the 5.6 percent reported in 2017.

While not a positive sign for investors that fix and flip properties, ATTOM chief product officer Todd Teta said it’s not a dire situation.

“With mortgage rates remaining strong and people staying in their homes longer, we have started to see a bit of a flipping rate slowdown,” Teta said. “However, this isn’t to say home flipping is going away. The market is still ripe with investors flipping and bargains still await, especially in the lowest-priced areas of the country, where levels of financial distress remain highest.”

Completed home flips in 2018 yielded an average gross profit of $65,000, which is down about 3 percent from an average gross flipping profit of $66,900 in 2017, ATTOM found. The $65,000 average profit in 2018 represented an average 44.8 percent return on investment — down from 50.3 percent in 2017.

2018, however, closed with bleaker performance. The average gross profit of home flips in the fourth quarter of 2018 was $62,000, which represents an average 41.9 percent return on investment and a seven-year low, ATTOM reported.

Where high flipping returns reign


There are still a handful of large metro areas in which flipping is performing remarkably well for investors’ returns.

Among 176 metros with a population of at least 200,000 and at least 100 home flips in 2018, ATTOM found the highest average gross flipping ROIs were Pittsburgh, Pennsylvania at 144.2 percent; Scranton, Pennsylvania at 131.7 percent; Atlantic City, New Jersey at 113.2 percent; Cleveland, Ohio at 112.1 percent); and Erie, Pennsylvania at 109.3 percent.

Cities with the highest home-flipping rates


Out of 53 metros with at least 1 million people, the highest home-flip rates in 2018 were Memphis, Tennessee at 11.7 percent; Phoenix, Arizona at 9.1 percent; Las Vegas, Nevada at 8.7 percent; and Tampa-St. Petersburg, Florida at 8.2 percent.

Among the same 53 metros, those with the biggest annual increase in the 2018 home-flipping rate were Boston, Massachusetts, up 33.3 percent; Tucson, Arizona, up 27.3 percent; and Raleigh, North Carolina, which was up 24.5 percent.

Flippers were faster in 2018


Homes flipped in 2018 took on average 180 days to complete, down from 181 days in 2017 but up from 159 average days to flip in 2008, ATTOM found.

Among 176 metro areas with a population of at least 200,000, those with the longest average time to flip were Provo, Utah at 219 days; Boise, Idaho, at 215 days; Erie, Pennsylvania at 213 days; and Gainesville, Florida at 213 days.