Fewer investors are taking on home flips during the pandemic. But many of those who’ve stayed with it are seeing profits rise.

The number of home flips dropped again in the third quarter, comprising only 5.1% of all home sales, ATTOM Data Solutions reports. Home flipping reflects a transaction in which the property is bought and sold within 12 months.

The gross profit on a typical home flip nationwide—which is the difference between the median sales price and the median paid by investors—increased to $73,766, the highest amount since at least 2000, ATTOM Data Solutions reports. That also is up significantly from $61,800 in gross profits recorded a year ago.

The markets seeing some of the highest home flipping profits in the third quarter compared to a year ago were Brownsville, Texas (return on investment up 182.9%); Austin, Texas (up 176.4%); Waco, Texas (up 157.4%); and Springfield, Mo. (up 145.3%), according to the report.

“Home-flipping again generated higher profits on less transactions across the United States in the third quarter of 2020 as investors continue to make more money on a declining number of deals,” says Todd Teta, chief product officer at ATTOM Data Solutions. “This all happened in the context of the pandemic, which has created unusual circumstances for the housing market to thrive, and that has included the home-flipping business. Too much is uncertain these days to say whether the latest trends will continue. But for now, the prospects continue looking up for home flipping after a period when they were trending the opposite way.”

Home flipping as a portion of sales was down in the third quarter in 93% of the 159 metro markets that ATTOM tracks. The largest quarterly decreases in the home flipping rate nationwide occurred in Killeen, Texas (where the rate was down 44.5%); Savannah, Ga. (down 43%); York, Pa. (down 42%); and Greeley, Colo. (down 41.5%).

On the other hand, the largest increases in home-flipping rates occurred in Davenport, Iowa (up 18.5%); Hilton Head, S.C. (up 16.8%); Scranton, Pa. (up 12.2%); Amarillo, Texas (up 10.9%); and Kalamazoo, Mich. (up 7.7%).

Some additional highlights from ATTOM Data Solutions’ latest report:

• Homes flipped in the third quarter were sold for a median price of $240,000. The median investor purchase price was $166,234.
• The highest home flipping profits measured in dollars tended to mainly be in the West and Northeast, led by San Jose, Calif.; Ventura, Calif; Los Angeles, Calif.; and San Francisco.
• About 57% of homes flipped in the third quarter were purchased with all cash, up from 51% a year earlier.
• Home flippers who sold in the third quarter took an average of 192 days to complete the transaction, which is the highest level since the third quarter of 2003, ATTOM Data Solutions reports.

The stress of 2020 is causing an overhaul in home design. For example, open floor plans are now being considered too open as households seek privacy for work and school while everyone is at home. As a result, home offices are growing in demand in buyers’ home search.

Real estate and design experts recently shared with realtor.com® some of the biggest home design trends likely in the new year, including:

Separated spaces.

Open floor plans are getting divided up. Homeowners are looking to create nooks or pockets for Zoom calls, lounging, exercising, and e-learning, design experts say. “New buyers are asking for homes with more separation, as sometimes multigenerational families share a home and need space and privacy amongst themselves,” Yorgos Tsibiridis, a broker at Douglas Elliman in the Hamptons, told realtor.com®.

Biophilic design.

Homeowners are craving nature in the pandemic and are bringing in more houseplants and indoor gardens. “During the pandemic when it was difficult for some to get their daily dose of nature, people started bringing the outdoors in with natural materials in their home,” Julie Busby, founder of the Busby Group at Compass in Chicago, told realtor.com®.

Wood-grain elements in the kitchen.

Wood-grain kitchen cabinets and counters are trending, offering a touch of organic and natural materials. Bill Darcy, CEO of the National Kitchen & Bath Association, told realtor.com® this may be another sign of tying home design elements to nature. Instead of all-white kitchens or painted cabinets, more homeowners are adding in wood-grain cabinets and wood countertops on to their kitchen islands, designers say.

Outdoor solitude.

Fireplaces, fire pits, patios and decks, screened-in porches, and outdoor kitchens have all gained popularity during the pandemic. The outdoor kitchen is particularly trending, as homeowners add outdoor refrigerators and dining areas in their backyards or create a more elaborate space that includes a fully equipped kitchen outside with a stovetop and appliances.

Bathrooms get smarter.

Smart home innovations are increasingly entering the bathroom.

“Touchless appliances, including motion sensors for lighting, and smart temperature control for bathroom floors will be more popular in the next year,” Darcy predicted to realtor.com®.

The work-from-home trend may be translating into a need-a-new-home trend. The COVID-19 pandemic has prompted more people to work remotely, and as more people hunker down at home, they’re looking at real estate for a move.

Forty-five percent of consumers recently surveyed by Homes.com say they would move if given the chance to continue working remotely. Twenty percent of respondents also indicated that remote work was the reason why they moved within the last year. Homes.com surveyed more than 1,000 consumers and 600 real estate professionals to learn about moving patterns fueled by the pandemic.

“The surge in the work-from-home population has rewritten the playbook for many homebuying and rental decisions, from when and where to relocate, to what people are looking for in their next residence,” says David Mele, Homes.com president. “That, in turn, is prompting changes for real estate professionals, many of whom are expanding their market area to better serve clients who are moving farther than before. If working from home becomes standard operating procedure for many companies, as predicted, these changes will be with us for years to come.”

More Americans are no longer bound to lengthy commutes to city centers as remote work grows. That is freeing them to choose new locations to live, as well. Thirty-two percent of real estate professionals surveyed reported an uptick in city-to-suburb moves, and 23% said they were fielding fewer requests for housing near public transportation or highways.

Instead, more consumers want to move farther out. Forty percent of consumer respondents said they have moved or plan to move more than 100 miles away, and half of those respondents are moving more than 500 miles away.

The pandemic is prompting moves that consumers hadn’t planned for either. One out of three consumers who moved in the last 12 months said they did not plan to move prior to the COVID-19 outbreak. About a quarter of those who’ve relocated or plan to do so soon say their decision to move is being sparked by a change in their job situation.

Desired home features are also changing in the pandemic. The most common preferences real estate agents say they’re noticing are requests for home offices, larger square footage, outdoor recreational spaces (such as pools, hot tubs, and decks), and upgraded kitchens.

Low mortgage rates may also be helping to keep elevated delinquencies in check, according to a new report from CoreLogic.

“Our analysis of CoreLogic public records shows that more than one-half of all home mortgage loans created since the onset of the pandemic have been no-cash-out refinance,” says Frank Nothaft, chief economist at CoreLogic. “By reducing their mortgage rate with these types of loans, homeowners have been lowering both their interest expense and risk of delinquency.”

As the COVID-19 pandemic rages on and hampers the economy, many homeowners may be looking for greater mortgage relief. Foreclosure moratoriums are in place and many lenders are offering assistance to those struggling.

Regardless, the rate of non-current loans is significantly higher this year due to the impact of COVID-19 on the economy. The national delinquency rate—loans that are 30 or more days past due or are in foreclosure—stands at 6.3%, which is higher than the 3.8% rate from a year ago, according to CoreLogic’s Loan Performance Report.

“Although delinquencies remain high, it’s clear the economy has passed an initial stress test,” says Frank Martell, president and CEO of CoreLogic. “High home equity balances and structural protections put in place as a result of the Great Recession contributed to surviving the test. Housing demand remains strong, and rates low, which provides optimism that the housing market will continue to be a bright spot in this COVID-ravaged economy.”

The foreclosure inventory rate—the share of mortgages in some stage of foreclosure—is at the lowest rate since at least January 1999. In response to the pandemic, Congress issued a foreclosure moratorium as part of the CARES Act to help homeowners who may be struggling to make payments.

Still, every state saw its delinquency rate increase in September compared to a year earlier. States that rely heavily on tourism have been hit hardest, such as Nevada, Hawaii, and Florida, CoreLogic’s report shows.

Consumers crave digital connection from small businesses, including from real estate firms, a new study finds. The COVID-19 outbreak has sparked a greater reliance on digital and mobile tech to do jobs and complete transactions.

Moxtra, a firm that offers digital solutions, recently surveyed 1,500 small business personnel and 1,500 small business customers across industries, including real estate, about digital offerings and sentiment.

Thirty percent of consumers say digital capabilities are a “primary requirement” when searching for a small business to work with nowadays. Eighty-four percent of consumers said they’d look to other companies if a firm was lacking in technology use or did not offer a good experience. Further, consumers say that disjointed digital experiences remain a top pain point in working with companies.

“This year, businesses learned that digital resilience was critical to surviving the pandemic—however, digital resilience is also critical to surviving in today’s digital age, period,” says Leena Iyar, chief brand officer for Moxtra. “However, the findings of this report indicate that consumers are demanding that businesses provide a simpler, more streamlined and more effective digital experience, or else they’ll move on to a competitor who will.”

Forty-eight percent of consumers said they prefer to engage with small businesses digitally as much as possible and only conduct in-person business when necessary. For example, 89% of small business customers agreed that it was important for them to be able to reach out digitally to small businesses instead of scheduling an appointment or phone call.

But the technology must be simple to use as well. Sixty-three percent of survey respondents said that the number of digital tools and technologies their company uses is making some tasks more complex.

“The use of a wide array of third-party tools can be confusing for both customers and internal personnel,” the report notes. “Offering a multitude of third-party channels might seem like the best method to allow every customer to reach you, but it actually puts the burden of disjointed communication on the customer, which can be overwhelming and frustrating for them.”

Many companies during the pandemic may have adopted a patchwork of technology to enable greater remote work as soon as the pandemic hit. But such “band-aid” solutions won’t suffice over the long haul without a more comprehensive strategy that streamlines and digitally manages business activities, the report adds.

“Small businesses are making headway with new technology,” Iyar says. “But just like the consumers they engage with, these businesses are also struggling to streamline interactions with the prevalence of disparate, disconnected technologies. By leveraging a high-touch, comprehensive portal, businesses will be able to provide holistic virtual experiences that mirror customers’ natural behavior.”

The appraisal can be a stressful process and may threaten to derail transactions. Twenty-one percent of REALTORS® say “appraisal issues” delayed their sales contracts in October, according to the most recent REALTORS® Confidence Index. Appraisal issues led to 13% of contracts being terminated. The appraiser evaluates the home’s lot size, condition (both inside and out), foundation, neighborhood, and any other amenities that add or decrease value.

Source: REALTOR® Confidence Index

Real estate professionals should prepare their sellers for the appraiser’s visit. Advise your clients to do a deep cleaning inside and outside the home, touch up paint, fix any minor maintenance issues, and have relevant paperwork—such as details about the home and comps—ready to hand over to the appraiser.

Appraisals can come in below a property’s sale price for several reasons. For example, buyers in competitive markets may have driven up a home’s sale price in a bidding war, or an appraiser may find a property defect. Perhaps an addition to the house didn’t have a construction permit, which the appraiser would label as “cost to cure,” according to an article from HomeLight.

If an appraisal comes in low, the seller likely will have to negotiate with the buyer over the price again. Homeowners can challenge a low appraisal, but success is likely limited, Bill Gassett, a real estate pro with RE/MAX Executive Realty in Hopkinton, Mass., writes for RISMedia. Homeowners will have to prove a mistake was made during the appraisal, such as incorrectly recorded square footage. The seller could request another appraisal, but that isn’t a guarantee of a higher price.