Tri-Cities home flipping changed little from last year’s sales trend during the first quarter of this year. It remains an integral part of the local market – especially for buyers who have seen their options decline by rising prices and higher mortgage rates.
According to ATTOM Data Solutions, 184 local flip sales occurred during the first three months of the year. They accounted for 10.7% of existing-home sales in the Johnson City metro area and 8.5% in Kingsport-Bristol. Flips have accounted for about one in 10 existing home sales for the past two years.
Attom’s national wrap-up of national conditions was flip sales increased to an 18-year high and accounted for one in 10 existing home sales. At the same time, ATTOM’s analysis found that while investor sales were up, typical raw profits on those details remained below where they were a year ago.
That wasn’t the case in the local analysis. Typical raw profits were up in both metro areas.
During the past year, some new investors have jumped into the market with visions of cashing in on the housing boom. Others have backed away, citing the uncertainty of materials and the labor shortage.
“The good news for fix-and-flip investors is that demand remains strong from prospective homebuyers, as evidenced by this quarter’s report,” said Rick Sharga, executive vice president of market intelligence for ATTOM. “The bad news is that rising mortgage interest rates are beginning to slow down home price appreciation rates, and buyers have become more selective – and less willing to outbid other buyers for properties they’re interested in. This is having a predictable impact on profit margins for investors.”
Here is how the flip market analysis looked in each of the Tri-Cities metro areas:
There were 90 first-quarter flip sales, up 86% from last year. That’s only two sales shy of the metro area peak number during the second quarter of 2021.
The median square footage of sales was 1,345. It had a median purchase price of $94,500, and investors paid cash for 63.3% of their flip purchases.
The median sales price was $190,000, ad one in three buyers paid cash.
There were 94 first quarte flip sales, up 20.7% from last year. Peak sales were 110 during the third quarter of 2021.
The median square footage was 1,208. It had a median purchase price of $74,750, and 68.1% were cash sales.
The median sales price was $160,000, and 31.9% of the buyers paid cash.
ATTOM’s analysis was from sales deeds. 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. Flipping veterans estimate the rehab costs typically run between 20% and 33% of the property’s after-repair value.
Categories: REAL ESTATE