|So, how’s flipping going?||So, how’s flipping going?||David S. Jones||Jones, D.||2019-09-20T05:00:00Z||Housing|
Flipping houses is still good business (and good television viewing for many HGTV fans). The total dollar volume of homes flipped in the second quarter of 2019 hit $8.4 billion, a 13-year high.
Texas continues to be a flipping hotbed. Of 53 Metropolitan Statistical Areas (MSA) studied by ATTOM Data Solutions, Austin (92.6 percent), Dallas-Fort Worth (86.4 percent), and San Antonio (83.1 percent) were in the top five markets with the highest percentage of 2Q completed flips purchased with financing.
Homes flipped in 2Q 2019 represented 5.9 percent of all home sales. That was down from a post-recession high of 7.2 percent but up from 5.4 percent a year ago.
“Home flipping keeps getting less and less profitable, which is another marker that the post-recession housing boom is softening or may be coming to an end," said Todd Teta, chief product officer at ATTOM.
Homes flipped in 2Q typically generated a gross profit of $62,700, a 39.9 percent return on investment. That's down from 40.9 percent (a 44.4 percent profit margin) in the first quarter. Profits on home flips have dropped six quarters in a row and are now at the lowest point since 4Q2011. San Antonio was among the markets with the smallest gross flipping profit ($27,117) and smallest rate of return (15.6 percent ROI).
Despite the quarterly drop in home-flipping rates, 104 of 149 MSAs analyzed posted a year-over-year increase in their rates. The number of homes flipped reached new peaks in ten MSAs, including San Antonio.
Homes flipped in the second quarter sold for a median price of $220,000. Homes flipped nationwide took an average of 184 days to complete the flip. McAllen-Edinburg-Mission (150 days) was among metros with the shortest average days to flip.
“Flipping houses is still a good business to be in, and profits are healthy in most parts of the country," said Teta. “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 as good as it was a few years ago."