4-year-low for flipping returns says ATTOM

Home flipping is becoming less frequent and returns are declining according to a new report.

Second-quarter figures form ATTOM Data Solutions shows that 5.2% of all single-family homes and condos purchased in the period were flipped, down from 6.6% in Q1 2018 and down from 5.4% in Q2 2017.

Meanwhile, returns from flips fell to a 4-year-low of 44.3% (gross ROI) from 47.8% in Q1 2018 and 50% in Q2 2017.

Of homes flipped in Q2 2018, 32.3% were purchased by the home flipper via a distressed sale – either in foreclosure or bank-owned, down from 35.8% in Q1 2018 and down from 38.7% a year ago.

"Fewer distressed sales are limiting the ability of home flippers to find deep discounts even while rising interest rates are shrinking the pool of potential buyers for flipped homes," said Daren Blomquist, senior vice president at ATTOM Data Solutions. "These two forces are squeezing average home flipping returns, pushing investors to leverage financing or migrate to markets with more distressed discounts available to achieve more favorable returns."

In dollar terms, investors made an average $65,520 when flipping a home in Q2 2018, a 2-year-low, compared to $69,500 in Q1 2018, which was an all-time high; and down from $$69,000 in Q2 2017.

More flips were financed

The report shows that the share of flipped homes that were financed increased to 38.6% in Q2 2018, up from 36.8% in the previous quarter. But this was down from a near-10-year high of 39.6% in Q2 2017.