The number of entities flipped hit a 10 year low in Q2 2018, according to ATTOM Data Solutions’ Q2 2018 US Home Flipping Report. Also, the average gross return on investment on flipped homes was 44.3%, down from 47% in Q1 2018 and down from 50% in A2 2017. 44.3% is the lowest gross flipping ROI since Q3 2014.
ATTOM indicated that 48,768 single-family homes and condominiums were flipped in Q2 2018. This home flipping rate represents 5.2% of all sales. In Q1 2018, the flipped rate was 6.6%; in Q2 2017, the flipped rate was 5.4%.
The average gross flipping profit was $65,520 in Q2 2018. Q1 2018 had the all-time high average gross flipping profit of $69,500. The average gross flipping profit was $69,000 in Q2 2017, the lowest average gross flipping profit since Q2 2016.
According to Daren Blomquist, chief economist and senior vice president with ATTOM Data Solutions, said, “Fewer distressed sales are limiting the ability of home flippers to find deep discounts even while rising interest rates are shrinking the pool of potential buyers for flipped homes. These two forces are squeezing average home flipping returns, pushing investors to leverage financing or migrate to markets with more distressed discounts available to achieve more favorable returns.”
To get a perspective on how the number of distressed sales impact flippers, in Q2 2018, 32.3% of homes flipped were distressed sales (either bank-owned or foreclosures.) In Q1 2018, 35.8% of homes flipped were distressed sales and 38.7% were distressed sales in Q2 2017. Q1 2010 was the peak at 68.2%.
States with the highest share of flips bought via distressed sales in Q2 2018 were
- 64.1% – New Jersey
- 60.3% – Delaware
- 55.4% – Indiana
- 48.4% – New York
Among the 140 metros with +200,000 people with at least 50 flips, the highest share of flips from distressed sales in Q2 2018 were
- Atlantic City – 71.0%
- El Paso – 70.5%
- Trenton – 65.2%
- Virginia Beach – 60.7%
- New York – 56.5%
According to Josh Cantwell, CEO of Strategic Real Estate Coaching and fix and lender Freeland Ventures,” Flipping (houses) in the Rust Belt continues to provide solid returns and continues to be a viable investment strategy…there are plenty of off-market sellers with aged properties and deferred maintenance looking to sell below market value.
The highest gross flipping returns in Q2 2018 were
- Louisiana – +102.5%
- Pennsylvania – +100.3%
- Ohio +81.4%
- Maryland – +76.1%
- Tennessee – +74.9%
The highest home flipping rates in Q2 2018 were in Washington DC (8.3%), Nevada (7.4%), Tennessee (7.2%), Arizona (6.7%, Maryland (6.5% and Alabama (6.4%).
The average amount of time it took to flip a home in Q2 2018 was 186 days compared with 182 days in Q1 2018. States with the shortest average times to flip were
- New Hampshire – 151 days
- Arizona – 161 days
- Nevada – 167 days
- Alabama – 168 days
- Missouri – 171 days