Investors are starting to step away from flipping homes as home price gains slow. The U.S. Home Flipping Report shows that the number of single family homes and condos flipped in the third quarter was down 12 percent from a year ago to the lowest level since early 2015, according to the report from ATTOM Data Solutions, a real estate data provider.
A total of 45,901 single-family homes and condos were flipped in the third quarter, comprising 5 percent of all single-family home and condo sales during the quarter.
“Home flipping acts as a canary in the coal mine for a cooling housing market because the high velocity of transactions provides home flippers with some of the best and most real-time data on how the market is trending,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “We’ve now seen three consecutive quarters with year-over-year decreases in home flips.” Blomquist says the last time this occurred was in 2014, following a jump in mortgage rates during the second half of 2013.
Homes that were flipped in third quarter sold for an average of $63,000 more than what the home flipper purchased them for, which is down from a record high average gross flipping profit of $68,000 in the first quarter, according to the report.
The metros with the overall highest home flipping rates in the third quarter were: Memphis, Tenn. (10.4%); Atlantic City, N.J. (9.1%); Phoenix (8.6%); Las Vegas (7.8%); and Huntsville, Ala. (7.5%).
ATTOM Data Solutions’ report on flipped homes purchased in third quarter also observed that:
- The median year built of homes flipped in the third quarter was 1978.
- The median square footage of homes flipped was 1,408, the smallest median square footage dating back to the first quarter of 2000.
- Nearly one-third of home flips sold for $100,000 to $200,000