2020 a solid year for Tri-Cities home flips

Local, local, local is a mantra for reports on this page because much of the time local conditions don’t mirror what you read or see on media reports. The 2020 house flipping story is the most current example.

According to an ATTOM Data Solutions’ analysis, 2020 wasn’t a banner year for home flippers. It’s an accurate assessment based on ATTOM’s nationwide data.  But when you localize the data, the story takes a turn.

Local home-flipping had a pretty good – in some cases it was a banner year – in 2020. Sales were up, so was market share. The price flippers paid was down in most of the local counties, as was the selling price. The average gross profits were up in two of the five counties, and the average gross return on investment (ROI) was up in three counties.

Nationwide the number of single-family homes and condos flipped in 2020 fell 13.1% compared to 2019. It was the lowest point since 2016, according to ATTOM. The number of flipped last year accounted for 5.9% of home sales.

In the five local counties included in the analysis, sales were up 23.7% from 2019, flipped homes accounted for 8.2% of the total resales reported by the Northeast Tennessee Association of Realtors (NETAR) Home Sales Report. The 2019 market share was 7.1% of sales.

Most of the 741 flip sales last year were in Sullivan Co – 274. Washington Co. had 214 flip sales, and Greeneville recorded 104. There were 80 in Hawkins Co. and 69 in Carter Co.

“Last year was a banner year for the U.S. housing market, with the apparent exception of the home-flipping business, which saw its fortunes slide a bit more in 2020,” says Todd Teta, chief product officer at ATTOM. “Home flippers did still make a nice profit on investments that generally take around six months to turn around—just not as much as they did in the previous few years. It’s too early to know if that small slide was a sign of weakness in the broader housing market or just a bump in the road. We will know much more as we gauge other key market metrics in the coming months.”

ATTOM’s report says the average gross profit last year was $66,300. That’s a 6.6% increase from 2019 and the highest point since at least 2005. However, the typical gross 2020 flipping profit was down from 2019 when it was a 40.5% return on investment.

Here’s how local conditions looked. The 2020 average gross profit compared to 2019:

Carter – $63,195, up 20.3%%

Greene – $64,750, up 8.8%

Hawkins – 35,200, down 15.5%

Sullivan – $65,800, up 6.2%

Washington – $63,000, up 27.5%

The average return on investment compared to 2019 was:

Carter – 102% – 84%

Greene – 125% – 108%

Hawkins – 54% – 68%

Sullivan – 89% – 102%

Washington – 70% – 58%

The average flipped sales for all the counties were at or below the most current affordability price range. The local average sales prices were:

Carter – $125,000

Greene – $116,750

Hawkins – $99,950

Sullivan – $140,000

Washington – $153,000

Some other highlights from the report are:

In Carter, Greene, and Hawkins counties, 70% to 78% of flippers paid cash for the home they bought.

In Sullivan Co., 64% of the flippers paid cash. In Washington Co. 62% were cash buyers.

The median time it took to flip a home in the five counties was 185 days.

The highest market share for flip sales was in Carter Co. – 9%.

The lowest market share for flips was in Washington Co. – 7.5%.

The zip code with the highest share of flip sales was 37620 in Bristol – 11.1%.

The zip code with the highest average gross profit was 37650 in Erwin – 116%

Don Fenley is a seasoned Tri-Cities journalist specializing in housing, economic and demographic trends. The Times-News carries his reports on the Sunday Money Page. He is also a frequent contributor to Business Matters on WETS and the Business Journal of the Tri-Cities’ print and electronic editions. Detailed or specific reports are available by contacting him at djfenley@gmail.com.

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