{"id":19831,"date":"2021-12-22T14:10:45","date_gmt":"2021-12-22T14:10:45","guid":{"rendered":"http:\/\/www.anthonydidonato.net\/wordpress\/?p=19831"},"modified":"2021-12-22T14:10:45","modified_gmt":"2021-12-22T14:10:45","slug":"home-flipping-activity-rises-even-as-profits-shrink","status":"publish","type":"post","link":"https:\/\/www.anthonydidonato.net\/wordpress\/home-flipping-activity-rises-even-as-profits-shrink\/","title":{"rendered":"Home Flipping Activity Rises, Even as Profits Shrink"},"content":{"rendered":"

Home Flipping Activity Rises, Even as Profits Shrink<\/h1>\n

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For the second quarter in a row, home flipping was on the rise as investors look to take advantage of quickly rising home prices. However, they\u2019re not seeing higher profits from their flips.<\/p>\n

Home flipping comprised 5.7% of all home sales in the third quarter, up from 5.2% a year ago, according to the \u201c2021 U.S. Home Flipping Report\u201d released by ATTOM Data Solutions. The typical raw profits remain below where they were a year ago, and profit margins have decreased to their lowest point since early 2011, the report notes.<\/p>\n

Researchers define a house flip as an arms-length transaction that occurred in the purchase and sale of the same property within the last 12 months.<\/p>\n

Profit margins declined in the third quarter as prices on flipped homes continued to rise more slowly than they did compared to investors\u2019 original purchase price of the properties, researchers note.<\/p>\n

In the third quarter, the gross profit on typical home flipping transactions\u2014the difference between the median sales price and the median paid by investors\u2014was at $68,847. That is down 1.6% compared to the $70,000 level recorded in the third quarter of 2020.<\/p>\n

The decrease in the typical profit margin from the third quarter of 2020 to the same period this year was the largest annual drop since early in 2009 when the housing markets were reeling from the Great Recession, researchers note.<\/p>\n

Still, investors are netting about a 32.3% return on investment compared to the original acquisition price.<\/p>\n

\u201cHome flipping produced another round of competing trends in the third quarter of this year as more investors got in on the action but got less out of it,\u201d says Todd Teta, chief product officer at ATTOM. \u201cIt\u2019s clear that declining fortunes weren\u2019t enough to repel investors amid a typical scenario of 32 percent profits before expenses on deals that usually take an average of five months to complete. We will see over the coming months whether the amount they can make on these quick turnarounds will still be enough to keep luring them into the home-flipping business or start pushing them elsewhere.\u201d<\/p>\n

Here are some additional insights from the latest home flipping report:<\/p>\n