Tri-Cities home flipping profits down, mid-year sales at five-year high

The sale of flipped homes in five Tri-Cities counties hit a five-year high during the first half of this year according to a compilation from Attom Data Solutions home flipping reports. At the same time, Q2 flips were less profitable than last year in all but Sullivan and Hawkins counties. A nationwide profitability decline is being called a marker that the post-recession boom is softening and may be coming to an end by Todd Teta, chief product officer at Attom.

Mid-year number of flipped home sales in the five local counties in Attom Data Solution’s Q2 report.

“Flipping homes is still a good business to be in, and profits are healthy in most parts of the county. 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 near as good as it was a few years ago.”

Gross return on investment data show that’s the case in the Tri-Cities area, but flips are another example of the hyper-local nature of local housing markets. For instance, nationwide Q2 flips generated an average gross profit of $62,700, up 2% from Q1, but down 2% from last year. During the same period, Sullivan Co. flips generated an average gross profit of $67,882, up 18% form Q1 and 32% better than last year. Q2 Geene Co. flips were just below the national average with $62,500, up 160% from Q1 and 204% better than last year. Gross profits for Carter, Hawkins, and Washington were below the national norm, but all local counties had a higher gross return on investment higher than the national average.

Comparison of median June single-family resales and the Q2 median sales price of flips. June’s median is higher than the other two months in Q2 according to NETAR’s Trends Report.

During Q2 there were 178 flips in the five-counties included in Attom’s Q2 report. That was an 11% share of all single-family, townhome and condo resales. The year-to-data total in those five counties was 239 sales. Mid-year flip sales have steadily increased since 2015 – the year the local existing home market began the record-setting pace it continues to experience.

Overall the median flipped price for local counties is below the median resale price from single-family homes reported in the Northeast Tennessee Association of Realtors’ (NETAR) Trends Report. That’s an important distinction when you consider that the availability of affordable homes has dramatically decreased during with the region’s hot resale market and inventory levels that are almost twice as low as normal market conditions. An added significance is flippers are picking up some of the slack in the local, new home industry weak performance in adding to its inventory.

Market share for flipped homes in the existing home market during Q2.

Last year flippers added more homes (559) in the five county’s housing stock than the new home industry (394 homes.)  They are on track to do the same thing this year.

The average time it took to flip a home during Q2 ranged from 221 days in Hawkins Co. 10 167 in Carter Co. That timeline is less than it was last year in all local counties expect Sullivan and Hawkins.

Categories: REAL ESTATE