The Real Deal Miami

“Canary in the coal mine”: Home flipping falls nationwide to 3-year low, report finds

Investors flipped nearly 46K houses and condos in Q3, signaling a possible slowdown
By Keith Larsen | December 06, 2018 07:00AM

Investors flipped 45,901 single-family homes and condos in Q3. (Credit: iStock)

Home flipping in the U.S. is down to its lowest levels in more than three years, the latest sign that the housing market is experiencing a slowdown.

Investors flipped 45,901 single-family homes and condos in the third quarter, down 12 percent from a year ago, according to a report published Thursday by Attom Data Solutions. It was the lowest number since the first quarter of 2015.

“Home flipping acts as a canary in the coal mine for a cooling housing market,” said Attom’s Daren Blomquist.

A number of recent data points and reports have signaled that the post-recession housing boom may be coming to an end. Most recently, the U.S. Commerce Department reported that new home sales dropped 8.9 percent compared to September, marking an almost two-and-a-half-year low.

In Miami, third quarter home flips fell to 1,667, a 15.7 percent drop from a year ago. In a recent survey, Miami homes sat on the market for an average of 84 days, among the longest amount of time in the nation.

In Los Angeles, investors flipped 1,299 homes, an 8.5 percent decline. The Chicago metro area experienced a smaller decline. It had 1,276 home flips, which was a 5 percent drop.

New York City countered the trend, however. Its 1,828 homes represented a 5.5 percent rise from third quarter 2017 numbers.

The housing slowdown is partly due to rising mortgage rates, which have made owning a home more expensive and could have pushed some potential buyers out of the market, experts say.

Rising rates and more expensive home prices could have also contributed to the drop in home flipping, given it has become increasingly difficult for buyers to find homes at distressed prices and then rehab them and turn a quick profit.

From July to September, the average gross flipping profit was $63,000, according to ATTOM. This represented a 42.6 percent return on a buyer’s investment, which was the lowest level since the first quarter of 2012.

Last year was a banner one for home flippers in the U.S. Investors flipped more than 207,000 condominiums and single-family homes in 2017, the most since 2006, according to Attom.