Flips account for 11% of local Q1 existing home sales


TRI-CITIES, Tenn.– Housing flip sales were up significantly in Hawkins and Sullivan counties during the first three months of this year. Flips were flat in Washington Co. They declined in Carter, Greene counties and in Bristol, VA.

Region wide there were 134 flips that accounted for a little over 11% of existing home sales for the quarter, according to ATTOM’s first-quarter US Home Flipping Report.

Flip sales are a closely monitored housing metric due to their impact on a market starved for inventory – especially inventory that’s in the traditional affordable and work-force housing price ranges. They’re also an important economic component for investors and entrepreneurs and the average return on investment (ROI) for their efforts. Their average gross ROI for the first quarter ranges from a low of 40% in Cater Co. to 113% in Sullivan.

The average gross ROI has declined from last year due to higher home prices, labor and materials costs. The highest Q1 returns were in the region’s two largest housing markets, Sullivan ($102,000) and Washington ($100,000).

All the Q1 average flip sales prices are at or below the affordable and work-force housing price ranges. They range from $178,950 in Greene Co. to $230,000 in Washington co.

The median purchase price ranges from $90,000 in Sullivan Co. to $149,000 in Carter Co.

Flip veterans estimate the rehab costs and other expenses run from 20% to 33% of the property’s after-repair value.

Local flip sales account for a higher market share of existing home sales than they do on the US level. According to ATTOM, the US share is 9% of sales. Locally it’s 11%.

The report also revealed that while flipping activity rose, mixed trends emerged for raw profits and profit margins. Profits and investment returns both increased slightly from the fourth quarter of 2022 to the first quarter of this year. But both also remained near low points over the past decade, reflecting ongoing financial struggles for home flippers.

“Home-flipping investors across the US may have finally halted the decline,” said Rob Barber, CEO of ATTOM. “In the first quarter, profit margins showed a slight upward turn after an extended slump, while interest in flipped homes continued to rise among buyers. However, investors shouldn’t assume they’re out of the woods just yet. Home-flipping carrying costs can easily erase a 22 percent return on gross profits, and it’s possible that the recent gain is merely a temporary blip. Nevertheless, the first-quarter trends offer some hope for investors indicating that brighter times may lie ahead.”

The average time it took from purchase to resale on home flips rose to 178 days in the first quarter of 2023, up from 165 in the fourth quarter of 2022 and 163 days in the first quarter of 2022. Locally, the average time from purchase to sale ranged from 146 days in Hawkins Co. to 213 days in Sullivan. The average was down from last year in four of the six local counties in the report.

Categories: REAL ESTATE