ATTOM, a leading curator of land, property data, and real estate analytics, today released its third-quarter 2024 U.S. Home Flipping Report showing that 74,618 single-family homes and condominiums in the United States were flipped in the third quarter. Those transactions represented 7.2 percent, or one of every 14 home sales, nationwide during the months running from July through September of 2024.
The latest portion of flipped properties was down from 7.6 percent of all sales in the U.S. during the second quarter of 2024, extending a common pattern seen during annual Spring and Summer buying seasons when other types of home sales spike. The flipping rate returned to the 7.2 percent level recorded in the third quarter of last year.
However, while the flipping rate followed historical trends, profits turned back downward for investors who buy, renovate and quickly resell homes following a period when their fortunes had been improving.
The latest data showed that home flipping nationwide typically generated just a 28.7 percent return on investment before expenses on homes re-sold during the third quarter of this year. That was down from 31.2 percent in the second quarter of 2024 after six straight quarterly increases that had signaled a marked improvement for the flipping industry.
The typical profit margin on homes flipped during the third quarter of 2024 – based on the difference between the median purchase and median resale price for home flips – slid down to only half of the mid-50 percent peak hit in 2016. It also stayed withing a range that could easily be wiped out by carrying costs that include renovation expenses, mortgage payments and property taxes, exposing again the struggles U.S. home flippers are having in turning healthy profits.
Gross profits on typical flips around the country, meanwhile, decreased to about $70,000 . That was down roughly $5,000 from the prior quarter and $10,000 from highs reached two years ago, although still up slightly from the third quarter of 2023.
“Home flippers just can’t seem to shake the doldrums. After more than a year when things were getting better, they turned notably worse again over the Summer,” said Rob Barber, CEO for ATTOM. “One quarter’s worth of numbers isn’t enough to make any grand statements about another downturn. The next six months should speak more to that, especially amid an ongoing tight housing market that should work in their favor. But as interest rates remain double what they were a few years ago and inflation keeps raising renovation costs, investors continue to have a tough time making the kind of profits that would lure more into the game.”
Home-flipping rates drop quarterly in two-thirds of U.S.
Home flips as a portion of all home sales decreased from the second quarter to the third quarter of 2024 in 115 of the 183 metropolitan statistical areas around the U.S. with enough data to analyze (62.8 percent), although they were still up annually in 95, or 51.9 percent of those markets. Measured against the same period of 2023, a majority of flipping rates changed by less than one percentage point. (Metro areas were included if they had a population of 200,000 or more and at least 50 home flips in the third quarter of 2024).
Among the metro areas analyzed, the largest flipping rates during the third quarter of 2024 were in Warner Robins, GA (flips comprised 22.7 percent of all home sales); Macon, GA (16.8 percent); Atlanta, GA (13.6 percent); Columbus, GA (12.8 percent) and Memphis, TN (12.7 percent).
Aside from Atlanta and Memphis, the highest third-quarter flipping rates among metro areas with a population of at least 1 million were in Birmingham, AL (11 percent), Phoenix, AZ (10.7 percent) and Tampa, FL (10 percent).
The smallest home-flipping rates were in Seattle, WA (3.5 percent); Des Moines, IA (3.7 percent); Honolulu, HI (3.8 percent); Portland, ME (3.9 percent) and Madison, WI (4 percent).
Typical home-flipping returns down in more than half of U.S.
The median $315,250 resale price of homes flipped nationwide in the third quarter of 2024 generated a gross profit of $70,250 above the median investor purchase price of $245,000. That resulted in a typical 28.7 percent gross profit margin before expenses in the third quarter of 2024, down more than two points from 31.2 percent in the second quarter of 2024. It also was down from 29.7 percent in the third quarter of last year.
The latest nationwide figure remained only about half the 56.3 percent level reached in mid-2016 and well below a more recent peak of 48.8 percent in 2020.
Profit margins decreased from the second to the third quarter of this year in 106 of the 183 metro areas analyzed (57.9 percent) and were down annually in 105 of those markets (57.4 percent).
Metro areas with the biggest quarterly declines in typical profit margins during the third quarter of 2024 included Salisbury, MD (ROI down from 129.8 percent in the second quarter of 2024 to 61.8 percent in the third quarter of 2024); South Bend, IN (down from 89.4 percent to 36.4 percent); Gainesville, FL (down from 64 percent to 20 percent); Peoria, IL (down from 78.2 percent to 36.4 percent) and Youngstown, OH (down from 54.1 percent to 20 percent).
Metro areas with a population of at least 1 million and the largest quarterly profit-margin drop-offs were Buffalo, NY (ROI down from 100 percent in the second quarter of 2024 to 73.5 percent in the third quarter of 2024); Honolulu, HI (down from 24.4 percent to 5.9 percent); Tulsa, OK (down from 59.1 percent to 40.8 percent); San Jose, CA (down from 26.8 percent to 12.1 percent) and Pittsburgh, PA (down from 115.3 percent to 101.8 percent).
Profit margins below 30 percent in nearly half of nation
The recent fallback resulted in typical gross profit margins of less than 30 percent in 80, or four of every 10 metros with enough data to analyze in the third quarter of 2024. That was up from 73 of the same group of metro areas in the second quarter and 69 a year earlier. Typical profit margins surpassed 50 percent in the third quarter of this year in only about one-third of the areas reviewed.
Markets with the largest gross returns on investment for typical home flips completed during the third quarter of 2024 again were concentrated in lower-priced areas, especially in the Northeast and South. They were led by Ocala, FL (141.5 percent return); Pittsburgh, PA (101.8 percent); Scranton, PA (100 percent); Flint, MI (98.9 percent) and Columbus, GA (93.8 percent).
Aside from Pittsburgh, the largest investment returns in the third quarter among metro areas with a population of at least 1 million were in Cleveland, OH (78.3 percent); Rochester, NY (78.2 percent); Baltimore, MD (78 percent) and Richmond, VA (75 percent).
Metro areas with a population of at least 1 million and the lowest returns on typical home flips in the third quarter of 2024 were Austin, TX (4.5 percent); Honolulu, HI (5.9 percent); Houston, TX (6.2 percent); San Antonio, TX (6.6 percent) and Dallas, TX (6.9 percent).
Higher-end markets still have best raw profit numbers
The largest raw profits on median-priced home flips in the third quarter of 2024, measured in dollars, were concentrated in areas of the West, South and Northeast regions where typical resale prices mostly topped $400,000. Eight of the top 10 fell into that category, led by San Francisco, CA (typical gross profit of $234,000 on a median resale value of $1.1 million); New York, NY ($170,000 profit on a median resale value of $600,000); Washington, DC ($170,000 profit on a median resale value of $545,000); Salisbury, MD ($168,016 profit on a median resale value of $440,000) and Boston, MA ($160,000 profit on a median resale value of $625,000).
The South also continued to dominate the low end of the spectrum, with 13 of the 15 lowest raw profits on median-priced transactions during the third quarter. Most came in areas with median resale prices below $300,000. The smallest were in Warner Robins, GA (typical 3,500 profit on a median resale value of $268,500); Killeen, TX ($5,302 profit on a median resale value of $240,627); Boise, ID ($7,936 profit on a median resale value of $439,469); Lubbock, TX ($12,372 profit on a median resale value of $200,688) and Amarillo, TX (14,852 profit on a median resale value of $170,852).
All-cash financing still comprises two-thirds of home flips
Nationwide, 64.1 percent of homes flipped in the third quarter of 2024 had been purchased by investors with cash only. That was up slightly from 63.1 percent in the second quarter of 2024, and up from the 61.6 percent portion in the third quarter of 2023. Meanwhile, 35.9 percent of homes flipped in the third quarter of 2024 had been bought with financing. That was down from 36.9 percent in the prior quarter and 38.4 percent a year earlier.
Among metropolitan areas with a population of 1 million or more and sufficient data to analyze, those with the highest percentage of homes flipped in the third quarter of 2024 that had been purchased with cash included Buffalo, NY (81.7 percent); Cleveland, OH (80 percent); Birmingham, AL (79.9 percent); Detroit, MI (76.4 percent) and Orlando, FL (74.1 percent).
Average time to flip nationwide decreases by a week
The average time it took from purchase to resale on home flips went down from 166 days in the second quarter of 2024 to 159 days in the third quarter. It also was down from 162 days in the third quarter of 2023.
Smaller portion of home flips going to buyers using FHA loans
Of the 74,618 U.S. homes flipped in the third quarter of 2024, 10.4 percent were sold to buyers using mortgages backed by the Federal Housing Administration (FHA). That was down from 11 percent in the second quarter of 2024, although still up from 10 percent in the third quarter of 2023.
Among metro areas with a population of 200,000 or more and at least 50 home flips in the third quarter of 2024, the highest percentages of flipped properties sold to FHA buyers — typically first-time home purchasers — were in Shreveport, LA (28.9 percent; Lakeland, FL (28.9 percent); Greeley, CO (25.9 percent); Visalia, CA (25.3 percent) and McAllen, TX (24.8 percent).
One of every six counties has home-flipping rates of at least 10 percent
Home flips accounted for at least 10 percent of all home sales in 155, or 15.7 percent, of the 989 counties around the U.S. with at least 10 flips in the third quarter of 2024. That was down from the 19.5 percent portion of all counties with enough data to measure in the second quarter of 2024. The leaders in the third quarter of this year were all in Georgia: Houston County (Warner Robins) (24.1 percent flipping rate); Cobb County (Marietta) (23.9 percent); Haralson County (west of Atlanta) (20.9 percent); Peach County (outside Macon) (20.1 percent) and Rockdale County (east of Atlanta) (19.7 percent).
Report methodology
ATTOM analyzed sales deed data for this report. 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. The average gross flipping profit is the difference between the purchase price and the flipped price (not including rehab costs and other expenses incurred, which flipping veterans estimate typically run between 20 percent and 33 percent of the property’s after-repair value). Gross flipping return on investment was calculated by dividing the gross flipping profit by the original purchase price.
https://www.attomdata.com/news/most-recent/q3-2024-home-flipping-report/
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