Local home flip market sees slight softening from last year; gross median profits up


During the first three months of this year, 115 homes were flipped the four local counties analyzed in Attom Data Solutions Q1 Home Flipping Report. The number of flips as a percent of total sales in Washington and Carter counties was above the U.S. average of 7.2%, but no local county met the state average of 9.3% of total sales.

The total number of flips nationwide was up 6.7% the highest home flipping rate since Q1 2010. The only two counties consistently in Attom’s analysis are Sullivan and Washington. During the first three months of this year, flips accounted for 6.8% of all existing sales in Sullivan and 7.4% in Washington County. That’s up from Q1 last year, but not the biggest share in the last six years for Sullivan County. That peak came in Q1 2016 at 8.1%. This year’s 7.4% share in Washington is the highest since 2014.

While the number of flips has not declined dramatically in the local market, the tight inventory and increased costs have tightened the market.

“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,” said Todd Teta, chief product officer at Attom. “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% from last year. Therefore, if investors are seeing profit margins drop, they may be acting now and selling before price increases drop even more.”

The median gross profit from flips in most local counties was higher than it was during the first three months of last year.  Flip sales are an important part of the market because most sell for under $200,000. Over 70% of all existing home sales in the local market are in the $200,000 and below price range. Listing in that price range has seen the tightest conditions for the past two years. Last year most months saw a four-months of inventory status in that price range, which typically points to a seller’s market. The $200,000 to $399,999 price range has seen an increase in sales in the past few years, and it is currently seeing an inventory that in the normal market conditions range.

Here what the median purchase and flipped price looked like in counties in the Q1 analysis.

Carter – $28,900 – $117,450

Hawkins – $43,000 – $109,000

Greeneville – $46,167 – $47,500

Sullivan – $59,960 – $116,000

Washington – $85,995 – $136,500

The average number of days to flip a property compared to last year was:

Carter – 203, up 38

Hawkins – 198, down 6

Greene – 154 – up 45

Sullivan – 176 – up 30

Washington – 171 – down 2

The median gross profit for flips in Q1 was compared to last year was:

Carter – $88,550 – $20,067

Hawkins – $65,900 – $46,600

Greene – $1,333 – $33,250

Sullivan – $56,041 – $27,399

Washington – $50,504 – $67,600

METHODOLOGY

Attom analyzed sales deed data for this report. A single-family home or condo flip was any arms-length transaction that occurred in the quarter where a previous arms-length transaction on the same property had occurred within the last 12 months. The average gross flipping profit is the difference between the purchase price and the flipped price (not including rehab costs and other expenses incurred, which flipping veterans estimate typically run between 20 percent and 33 percent of the property’s after repair value). Gross flipping return on investment was calculated by dividing the gross flipping profit by the first sale (purchase) price.

 



Categories: CORE DATA, REAL ESTATE

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  1. Sullivan, Washington investment properties decline, vacancy rates and rents up – DON FENLEY @ CORE DATA

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