Tri-Cities home flip sales were down significantly during the first three months of this year. Nationwide they were down in 70% of the metropolitan statistical areas analyzed in ATTOM Data Solution’s Home Flipping Report. The rate commonly dropped from about 5 percent to 3 percent.
Year-over-year sales were down more than 70% in both Sullivan and Washington counties. In addition, flip sales in the region’s two largest housing markets were also down more than 70% from the last three months of 2020.
Sullivan had 17 flip sales during Q1 compared to 46 last year.
Washington Co. had 12 sales this year compared to 35 during the first three months of last year.
Here’s what the region’s Q4 sales looked like. Carter, Greene, and Hawkins were not part of the most current analysis since then didn’t reach the 10 sales cut-off.
Carter – 10
Greene – 24
Hawkins – 24
Sullivan – 83
Washington – 53
One-quarter’s data doesn’t necessarily mean the flipping market is in the toilet. The more likely reason for the downturn is the same that concerns those who watch affordability. Prices have increased dramatically. That’s squeezing the flipping profitability. Material costs have significantly increased, and the lack of inventory is limiting choices for flippers. There has also been an increase in buyers who took the home improvement and upgrade route rather than looking at HGTV ready homes.
Flipping has a significant role in the local housing market. Last year flip sales accounted for a little more than 9% of all existing home sales. And most of those sales were four square in the affordability zone of $120,000 to $160,000. So far this year, the median flip sale in Sullivan during Q1 was $130,000. It was $141,000 in Washington Co.
The median purchase price for a flipped home in Johnson City during Q1 was $99,000, up from $78,750 last year. The median sales price was $141,000, up from $137,500, giving the flipper an 84.4% gross return on investment.
Sullivan Co. flippers paid a median purchase price of $90,000, up from $78,750 last year during Q1 this year. The median sales price was $135,000, down from $141,000 last year. They had a 50% gross return on investment this year.
“The first quarter certainly marked a notable downturn for the flipping industry, with the big drop-in activity suggesting that investors may be worried that prices have simply gone up too high,” said Todd Teta, chief product officer at ATTOM. “After riding the housing boom along with others for years, they now might be having second thoughts. Whether this is the leading edge of a broader market downturn is little more than speculation.”
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Categories: REAL ESTATE