A little shine comes off local home flip market in Q1


Some of the shine came off house flipping in the Tri-Cities during the first three months of this year. But Sullivan and Washington counties’ share of flipped homes remains on par with the national average.

q1 2015Flippers in the two largest county markets – Sullivan and Washington TN – made money, but the average gross profit was down substantially from Q1 last year. The year-to-year comparison shows a  91.8% drop in Sullivan and 34.7% in Washington.

The only county that saw an increase in flips as a share of total sales was Carter Co.  It was equal with neighboring Washington Co. with 12 flips. Sullivan County had 18.

The downside to Carter County’s increase in number was a loss of average gross profits.

According to RealtyTac’s Q1 U.S. Home Flipping Report, 17,309 single family homes were flipped — sold as part of an arms-length sale for the second time within a 12-month period — in the first quarter, 4% percent of all single family home sales during the quarter. The share of homes flipped in the first quarter was the lowest since the second quarter of 2011.

Here’s what the local county Q1 shares came in at:

  • Sullivan – 4.1%.
  • Washington TN – 3.5%.
  • Washington VA – 3.2%
  • Greene – 2.7%.
  • Unicoi – 2%.
  • Hawkins – 1%.

The average gross profit for completed flips in the first quarter was $72,450, up from $61,684 in the first quarter of 2014 to the highest level going back to the first quarter of 2011, the earliest where data is available.

RealtyTrac had complete data for only three local counties for the gross profit comparisons and they are considerable below the national average:

  •  Carter – A $13,513 loss compared to last year.
  •  Washington TN – A $35,875 profit compared to last year.
  •  Sullivan – A 9,667 profit compared to last year.

“The strong returns for home flippers in the first quarter demonstrates that there is still a need in this recovering real estate market for move-in ready homes rehabbed to more modern tastes, particularly given the dearth of new homes being built,” said Daren Blomquist, vice president at RealtyTrac. “The challenge for flippers in 2015 will be finding inventory to flip. Flippers ideally want to buy distressed homes that provide them with an opportunity to add value in markets where there is good affordability and ample demand from buyers for the finished flip product — whether those buyers are millennials becoming first-time homebuyers, baby boomers purchasing their present or future retirement home, or buy-and-hold real estate investors looking for turnkey rental properties that cash flow.

RealtyTrac analyzed sales deed data and automated valuation data for this report. A single family home flip was any transaction that occurred in the fourth quarter where a previous sale on the same property had occurred within the last 12 months. Average gross profit was calculated by subtracting the average price for the first sale (purchase) from the average price of the second sale (flip). Average gross return on investment was calculated by dividing the average gross profit by the first sale (purchase) price.

RealtyTrac’s full report can be found at http://www.realtytrac.com/news/real-estate-investing/q1-2015-u-s-home-flipping-report/

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