A recent report shows that the house flipping rate in the US real estate market has reached a 9-year high in the first quarter of 2019.
The US House Flipping Report 2019
ATTOM Data Solutions reported that Q1 2019 saw 49,059 single family homes and condos flipped in the market. The number of houses flipped is actually a drop of 2% from Q4 2018 and 8% lower from the same time last year. It actually represents a 3-year low.
However, the rate of house flipping is up. The number of single family homes and condos flipped actually accounted for 7.2% of all US home sales in Q1 2019. This rate was up 5.9% from the previous quarter and up 6.7% from this time last year, amounting to the highest house flipping rate since Q1 2010.
According to the report, 62% of US real estate markets studied (from a total of 138 metropolitan statistical areas) saw a YOY increase in the house flipping rate. These markets included:
- Columbus, Georgia (up 83%)
- Raleigh, North Carolina (up 73%)
- Charlotte, North Carolina (up 65%)
- McAllen-Edinburg, Texas (up 55%)
- Milwaukee, Wisconsin (up 49%)
- San Antonio, Texas (up 47%)
- Houston, Texas (up 41%)
- Atlanta, Georgia (up 38%)
- Pittsburgh, Pennsylvania (up 36%)
- Minneapolis, Minnesota (up 33%)
Looking at how US house flippers have been profiting this year so far, the median sale price was $215,000 with a median purchase price of $155,000. The average gross profit was $60,000. This equaled an average 38.7% return on investment (ROI). Compared to the average gross flipping profit of Q4 2018, this was down from 42.5% ($62,000). Profits were also higher this time last year, with an average of 48.6% ($68,000). In fact, Q1 2019 home flippers actually saw profits hit an 8-year low.
Real estate markets that saw the lowest ROI in the nation included:
- McAllen-Edinburg, Texas (profit of $8,752)
- Daphne, Alabama (profit of $15,761)
- Boise City, Idaho (profit of $18,332)
- Lexington, Kentucky (profit of $20,000)
- San Antonio, Texas (profit of $23,596)
Related: How to Make Money Flipping Houses- Tips for Maximum Profits
Why is the rate of house flipping increasing even if profits are actually dropping? Here is what Todd Teta, the Chief Product Officer at ATTOM Data Solutions, says is the cause for this interesting real estate market trend:
With interest rates dropping and home price increases starting to ease, investors may be getting out while the getting is good, before the market softens further. While the home flipping rate is increasing, gross profits and ROI are starting to weaken and the number of investors that are flipping is down 11 percent from last year. Therefore, if investors are seeing profit margins drop, they may be acting now and selling before price increases drop even more.
Despite the drop in the average gross profits, real estate investors in 11 US markets enjoyed a high ROI, most notably:
- Pittsburgh, Pennsylvania (131.2%)
- Flint, Michigan (127.6%)
- Shreveport, Louisiana (112.5%)
- Scranton, Pennsylvania (112.0%)
- Knoxville, Tennessee (105.0%)
- Cleveland, Ohio (100.0%)
- Philadelphia, Pennsylvania (100.0%)
- Buffalo, New York (89.7%)
- Memphis, Tennessee (79.2%)
Related: The Best Cities to Flip Houses and Make a Profit in 2019
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