Flipped single-family and condo sales set a new local record in 2021. According to Attom Data Solutions, 702 single-family homes and condos were flipped. That was up 16% from 2020 and a 72% increase since 2015 when the local housing market shifted into recovery overdrive.
Attom’s year-end Home Flipping Report shows the number of flips nationwide was 26% higher than in 2020 and at the highest point since 2006. Last year’s flips accounted for 5.5% of U.S. home sales. They were almost 8% of sales in the 21 local zip codes in Attom’s analysis.
Flipping homes has always been part of the real estate market. Participants varied from real estate agents to landlords adding to their rental inventory to professional flippers. Flips numbered in the mid 400s to the lower 500s until 2019. That’s when local inventory levels dropped below balanced market conditions. They were up 19% in 2019, then plateaued in 2020 and increased 16.2% last year. They have accounted for 7% to 8% of the region’s total home sales since 2018. But in some zip codes (37643 in Elizabethton and 37620 in Bristol), that bumped up to a little over 10% of all sales last year.
During the pandemic, a surge of buyers flooded the market amid a confluence of factors. Tops among them was a combination of historically low mortgage rates and a desire of many households that were unscathed financially by the pandemic to trade densely populated virus-prone areas for the perceived safety and side spaces offered by a single-family home and yard. Many of these pandemic refugees set their sights on NE Tenn.
The current shortage of inventory and rising prices also sidelined some flippers. One local professional flipper said he put a hold on new projects because of higher prices and longer wait times for everything from lumber to appliances. Attom’s year-end analysis shows that the year-over-year flipping rate declined in 11 of the 21 local zip codes.
“While gross profits were lower for fix-and-flip investors in 2021, there may have been offsets that protected net profits,” said Rick Sharga, Attom’s executive vice president of market intelligence. “Fewer flippers financed their purchases, so their cost of capital was lower. And it took less time to execute a flip, reducing holding costs, and suggesting that less extensive – and less expensive – repairs were needed to bring the properties to market. A lot of the mark-up on fix-and-flip properties historically has come from the value of those repairs, but so have a lot of the costs that reduce net profits.”
Attom’s analysis doesn’t consolidate purchase and sales data for local zip codes. And no net profit data on U.S. or local flips are available. Last year’s median purchase prices ranged from a low of $85,000 in Greene’s 37743 zip code to $165,000 in Jonesborough and Johnson City’s 37615 zip code. The median sales price ranged from a low of $185,300 in Elizabethton to $227,000 in Piney Flats.
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Categories: REAL ESTATE