Home flipping activity sinks to 3.5-year low

by Francis Monfort10 Dec 2018

The number of home flips decreased in the third quarter to its lowest level since the first quarter of 2015, indicating that the housing market is cooling down, according to the Q3 2018 US Home Flipping Report released by ATTOM Data Solutions.

The report found that a total of 45,901 US single-family homes and condos were flipped during the quarter, down 12% from a year ago and a 3.5-year low.

Third-quarter home flips represented 5% of all single-family home and condo sales during the period, their lowest level since Q3 2016. This compares to home flipping rates of 5.2% in the second quarter and 5.1% in the third quarter of 2017.

"Home flipping acts as a canary in the coal mine for a cooling housing market because the high velocity of transactions provides home flippers with some of the best and most real-time data on how the market is trending," said Daren Blomquist, senior vice president at ATTOM Data Solutions. "We've now seen three consecutive quarters with year-over-year decreases in home flips. The last time that happened was in 2014 following the mortgage rate jump in the second half of 2013, but it's still far from the 11 consecutive quarters with year-over-year decreases in home flips extending from second quarter 2006 through fourth quarter 2008 and leading up to the last housing crash."

ATTOM also found that average home flipping returns dropped to a 6.5-year low during the quarter. Third-quarter flips sold for an average of $63,000 more than what the home flipper purchased them for, its lowest level since the second quarter of 2016. The third-quarter average is down from the all-time high average gross flipping profit of $68,000 in the first quarter, and down from an average gross flipping profit of $65,000 a year ago.