A house or condo is “flipped” if it’s sold for the second time within a 12-month period.
ATTOM Data Solutions, curator of the nation’s premier property database, recently released its Q1 2018 U.S. Home Flipping Report, which shows that 48,457 U.S. single family homes and condos were flipped in the first quarter of 2018, down 4 percent from the previous quarter and down 3 percent from a year ago to a two-year low.
The 48,457 homes flipped in the first quarter represented 6.9 percent of all home sales during the quarter, up from 5.9 percent in the previous quarter and unchanged from a year ago — matching the highest home flipping rate since Q1 2012.
Homes flipped in Q1 2018 sold at an average gross profit of $69,500, up from an average gross flipping profit of $68,250 in the previous quarter and up from $66,287 in Q1 2017 to the highest average gross flipping profit since ATTOM began tracking in Q1 2000.
The average gross flipping profit of $69,500 in Q1 2018 translated into an average 47.8 percent return on investment compared to the original acquisition price, down from a 48.9 percent average gross flipping ROI in Q4 2017 and down from an average gross flipping ROI of 50.3 percent in Q1 2017 to the lowest level since Q2 2015 – a nearly three-year low.
“The 2018 housing market is a double-edged sword for home flippers,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. Rapidly rising home prices boosted by low available inventory of homes for sale or for rent are padding profits at the back end when flippers sell, but those same market realities are eroding flipping returns at the front end by forcing flippers to pay more to acquire homes to flip.”
Gene and Katie Hamilton are authors of Fix It and Flip It (second edition) published by McGraw-Hill available wherever books are sold.