High Rates of Home Flipping Could Spell Trouble

June 10, 2019
renovate
Photo: Unsplash/Nolan Isaac

Flipped homes comprised the highest percentage of home sales in nine years in the first quarter of 2019, but that doesn’t necessarily indicate market strength, according to MarketWatch.

Just over 49,000 single-family homes and condos were flipped in the first quarter of 2019, according to a report released this week by real-estate data firm Attom Data Solutions. These homes comprised 7.2% of all home sales nationwide during that time period, representing the highest home-flipping rate since the first quarter of 2010.

But that’s not necessarily a positive indicator of the housing market’s strength, said Todd Teta, Attom’s chief product officer. The number of homes that were flipped was actually down 8% from the previous year to a three-year low. And the number of investors engaging in home flipping has dropped 11% over the past year.

“While the home flipping rate is increasing, gross profits and ROI are starting to weaken,” Teta said in the report. “If investors are seeing profit margins drop, they may be acting now and selling before price increases drop even more.”

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