Investors flipped fewer homes in the second quarter compared to the same period one year ago, mostly due to declining profits.
ATTOM Data Solutions said in its 2019 Home Flipping Report that the number of homes flipped in the second quarter was down 5.2% from a year ago, comprising 5.9% of all home sales in the period.
The decline is due to investors seeing less profit from their flips this year, ATTOM said. In the second quarter, flipped homes generated an average gross profit of $62,700, which is the difference between the median sales price and the median paid for the properties by investors, ATTOM said. That means profits are down 2% from a year ago. Investors are now seeing an average return of just 39.9% on their flipping investments, compared to 40.9% in the first quarter of 2019.
“Home flipping keeps getting less and less profitable, which is another marker that the postrecession housing boom is softening or may be coming to an end,” said Todd Teta, chief product officer at ATTOM Data Solutions. “Flipping houses is still a good business to be in and profits are healthy in most parts of the country. But push-and-pull forces in the housing market appear to be working less and less in investors’ favor. That’s leading to declining profits and a business that is nowhere near as good as it was a few years ago.”
The areas that saw the largest decrease in flipping profits were Raleigh, N.C.; Savannah, Ga.; San Antonio, Texas; Springfield, Mo.; and Baton Rouge, La.
But some markets are still seeing growth in home flipping activity. More than 25% of all real estate sales in Pima County, Ariz.; Cuyahoga County, Ohio; Shelby County, Tenn.; Camden County, N.J.; and Shelby County, Tenn. were home flips, ATTOM said.