Here’s a quick housing market reality check compliments of Attom Data Solutions year-end 2019 Home Flipping Report. For every new home permit issued in Hawkins Co. there were more than three flip sales. And the number of flip sales in Sullivan Co. almost equaled the number of new home permits in that county. That factoid isn’t representative of the entire local market, but it’s a noteworthy reminder that what the local market is experiencing is anything but stable market conditions.
Here’s the big picture. There were 965 new home permits issued and 599 flip sales in the five local counties included in the analysis.
Here’s how flip sales stacked up against new home permits in those counties:
Carter – 60 – 105.
Greene – 80 – 145.
Hawkins – 56 – 16.
Sullivan 248 – 276.
Washington 155 – 423.
The local existing home market took off like a rocket four years ago and hasn’t slowed, so far. Resales last year were up 33% from 2015 – the resale launch year. That pushed the average resale price up 17%. During the same period, new home permits increased by 29%. Much of the new homes in that region were in the $250,000 and up ranges. Flip sales increased 62%, and their average sales price is solidly in the under $200,000 price range that accounts for most home sales is getting squeezed by prices growing faster than local wages.
U.S. flip sales were up 2%, according to Attom.
There were 599 flips in the five counties included in Attom’s analysis last year. That’s the same number as 2018.
Three of the five local counties in the analysis – Carter, Hawkins, and Washington – had fewer flips than last year while Sullivan and Greene counties had big increases. Sullivan was up 21.3%, and Greene was up 11.1%. When you look at the change from five years ago, each of the counties has large increases that range from 24.7% in Washington Co. to 89.6% in Sullivan Co.
“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. This happened as the cost of buying properties continued to rise faster than gains on resale,” said Todd Teta, chief product officer at ATTOM Data Solutions. “That’s not to say that the home-flipping industry is tanking or losing its allure for investors because home flipping rates are higher than they’ve been in eight years. But profits did continue to decline again for investors.”
In an example of hyper-local real estate conditions, declining profits wasn’t the case for Tri-Cities flippers. The average gross profits increased in every county except Washington.
Here’s what the 2019 average gross profits looked like in Attom’s report compared to last year:
Carter – $53,500 – $34,975.
Greene – $62,100 – $38,400.
Hawkins – $41,650 – $34,420.
Sullivan – $63,075 – $48,000.
Washington – $49,400 – $54,600.
The median price for one of last year’s flip sales was below the $200,000 price level. That’s the price range that dominates to local single-family and condo resale market. But the market share of resales in that price range has dropped from over 75% of all sales to 62% of all sales during the 12 months ending on Feb. 10 this year. The sales of homes in the next higher price tier ($200,000 to $399,999) has increased its market share from 26% of all sales to 28% during the same period. Some, but not all, of that increase is attributed to people who were cash-flush from the sales of homes in more expensive housing markets selling and relocating to this area.
Flip sales share of all resales has increased during the record-setting period for the existing home market. Sullivan Co. recorded the most significant increase. Sullivan Co. also increased its market sale of all single-family resales during 2018 and 2019.
Here’s how the market share for 2019’s flips looks compared to 2015.
Carter – 8.4% – 8.2%.
Greene – 7.4% – 6.8%.
Hawkins – 6.7% – 4.5%.
Sullivan – 8.2% – 4.9%.
Washington – 6% – 5.1%.
The average time it took for an investor to flip a home last year ranged from a low of 169 days in Hawkins Co. to a high of 190 in Sullivan Co.
Attom Data Solutions analyzed sales deed data for its Flipping 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% and 33% 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: REAL ESTATE