More people are flipping homes, but they’re making less money doing it.
The number of homes flipped in the U.S. in 2019 was 6.2 percent of all home sales throughout the year, an eight-year high, according to Attom Data Solutions’ Year-End 2019 U.S. Home Flipping Report. In 2018, flipped houses represented 5.8 percent of all home sales, and in 2017 it was 5.7 percent of all home sales.
A total of 245,864 single-family homes and condos were flipped in the U.S. in 2019, up 2 percent from 2018 to the highest percentage of homes flipped since 2006.
However, more homes flipped and more sales of flipped homes did not result in greater profit margins.
Attom Data Solutions
Flipped homes generated a gross profit of $62,900 in 2019 (what Attom calculated as the difference between the median sales price and the median amount paid by investors), a 40.6 percent return on investment (ROI). This profit margin declined 3.2 percent from $65,000 in 2018 and 6 percent from $66,899 in 2017, the post-recession peak. In comparison, house flippers earned a ROI of 45.8 percent in 2018 and a 51.4 percent ROI in 2017.
Attom Data Solutions
“Home-flipping profits across the U.S. dropped again in 2019 as the business of buying and selling houses absorbed its worst year since the housing market was mired in the fallout from the Great Recession,” Todd Teta, chief product officer at Attom, said in a statement. “This happened as the cost of buying properties continued to rise faster than gains on resale.”
Out of 53 markets with a population of 1 million or more, those that reported the smallest gross flipping profits in 2019 were Raleigh, North Carolina ($23,000); San Antonio, Texas ($31,756); Phoenix, Arizona ($33,641); Las Vegas, Nevada ($34,300); and Houston, Texas ($36,375). The lowest ROIs in these same markets for 2019 were in Raleigh, North Carolina (10.5 percent); Austin, Texas (13.7 percent); Las Vegas, Nevada (14.7 percent); Phoenix, Arizona (15.1 percent) and Dallas, Texas (18.7 percent).
Attom also analyzed 190 metropolitan statistical areas with a population of at least 200,000 and at least 100 home flips throughout the year. Out of these areas, 122, or 64.2 percent, saw an increase in home flip sales from 2018 to 2019. Laredo, Texas (up 103.5 percent); Raleigh, North Carolina (up 59.8 percent); Charlotte, North Carolina (up 44.1 percent); Fort Smith, Arkansas (up 43.2 percent); and Columbus, Georgia (up 40.5 percent) saw the greatest annual increases.
In metropolitan areas with a population of 1 million or more, the largest annual flipping rate increases — aside from in Raleigh and Charlotte — included Atlanta, Georgia (up 39.1 percent); San Antonio, Texas (up 37.2 percent); and Tucson, Arizona (up 34.2 percent).
Last year saw an increase in flipped homes purchased all-cash: 56.2 percent of homes flipped in 2019 were purchased all-cash compared to 54.1 percent in 2018. In contrast, flipped homes purchased with financing decreased to 43.8 percent in 2019 from 45.9 percent in 2018.
However, the number of flipped homes that were sold to buyers using a loan backed by the Federal Housing Administration increased to 14.4 percent in 2019, up from 13.1 percent in 2018. But, this number was still down from 16.2 percent in 2017. The greatest percentage of flipped homes sold to individuals with this loan were in Stockton, California (29.9 percent); Merced, California (27.7 percent); Visalia, California (27.4 percent); York, Pennsylvania (27.4 percent) and Lakeland, Florida (26.4 percent).
Fourth-quarter 2019 data revealed that the 56,945 home flips that occurred during this quarter were completed by 24,096 investors, which means there were roughly 2.36 flips per investor. Flipped homes purchased by investors with financing during Q4 represented 39.6 percent of all homes flipped during this quarter, down from 44.2 percent in Q3 2019 and down from 45.9 percent in Q4 2018. Homes flipped during Q4 2019 took an average of 170 days to flip, much less than the nationwide average for the entire year of 2019, which was 178 days.