USA Today’s Hadley Malcom talks with USA Today contributor Jeff Reeves who explains a few simple tips to help you save for purchasing a home.
(USA MONEY, USA TODAY)
Corrections & Clarifications: A previous version of this story misstated when the Attom Data report was released.
The rate of buying, fixing up and reselling a house – also known as flipping – hit a nine-year high with over 49,000 single-family homes and condos selling in the category in the first quarter.
However, experts warn that’s not necessarily an indicator of the housing market’s overall strength.
A report released June 6 by the property databaseAttom Data Solutions found that flipping activity represented 7.2% of all home sales nationwide during the start of 2019. That’s up from 5.9% in the previous quarter and up from 6.7% this time last year, representing the highest home-flipping rate since the start of 2010.
Still, that’s only part of the picture.
The total number of homes that were flipped was down 8% from the first quarter of 2018, and the number of investors engaging in the activity was also on the decline.
Homeless in College: Students sleep in cars, on couches when they have nowhere else to go
Experts say that an uptick in home flipping activity could actually indicate that conditions in the housing market are worsening.
“While the home flipping rate is increasing, gross profits and ROI are starting to weaken, and the number of investors that are flipping is down 11% from last year,” Attom’s chief product officer Todd Teta said in the new report.
“If investors are seeing profit margins drop, they may be acting now and selling before price increases drop even more.”
In the first quarter, flipped houses sold for a median price of $215,000. The median purchase price stood at $155,000, making the gross flipping profit just $60,000, which is a three-year low. In the same quarter last year, the gross flipping profit was $68,000.
That may be why some investors decided to sit on the sidelines.
“With interest rates dropping and home price increases starting to ease, investors may be getting out while the getting is good, before the market softens further,” Teta said.
Late last year, researchers told MarketWatch that the real estate market may be cooling down, describing home-flipping as a “canary in the coal mine” as the high velocity of transactions give flippers real-time data on the direction of the market.
The time it took to flip the house also was slightly down from a year ago, 180 days compared to 182 days, Attom found.
Thank you! You’re almost signed up for
Keep an eye out for an email to confirm your newsletter registration.
Follow Dalvin Brown on Twitter: @Dalvin_Brown
Read or Share this story: https://www.usatoday.com/story/money/2019/06/10/housing-market-trouble-flipping-rate-hits-9-year-high/1406883001/