Investors in Dallas-Fort Worth flipped 2,600 homes and condos in the first quarter, more than double the number a year earlier, according to data from Attom Data Solutions.
That’s double the number of homes flipped in North Texas a year ago and represents 13 percent of all sales in DFW, the Dallas Morning News reported. Attom defines a flip as a property that has had multiple transactions within the past 12 months.
“The good news for fix-and-flip investors is that demand remains strong from prospective homebuyers, as evidenced by this quarter’s report, which shows that one of every 10 homes sold during Q1 was a flip,” said Rick Sharga, executive vice president of market intelligence for Attom Data Solutions, in a statement.
Pending home sales are still on the rise in DFW and other cities, and the number of flips in the area has increased 133 percent from last year. Rising home prices have helped fiel the flippers’ market. In May, the three-month moving average of home prices in the Dallas-Fort Worth market was up by about 17 percent from a year earlier.
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“The bad news is that rising mortgage interest rates are beginning to slow down home price appreciation rates, and buyers have become more selective — and less willing to outbid other buyers for properties they’re interested in,” Sharga said.
Mortgage rates in North Texas reached a record 6 percent earlier this month, which is pricing many new homebuyers out of the market. This has led to a further decline in overall home sales for the North Texas region, which in March dropped 93 percent from the same time last year.
Dallas-Fort Worth was one of the few markets in the U.S. that saw an uptick in sales margins from last year, according to the publication, going up about 11 percent. On a national scale, flips represented about 10 percent of all home sales, and gross margins for investors dropped to their lowest point since 2009.
California-based data firm Kukun reported in a separate analysis that low inventory and strong price growth across the U.S. may have been the catalyst that compelled speculators to hop on this trend and hold onto homes to resell them rather than renovate them.
The report found that flippers have seen little to no returns above general home price appreciation while more homes are being flipped in shorter periods of time, and that flippers applied for building permits for renovations at near the lowest rate on record in the first quarter. Kukun reported that only about 14 percent of flippers in Dallas-Fort Worth applied for permits on their properties as of March 2022.
“While not definitive, we believe these are some of the first signs of speculation in the U.S. housing market since the Great Recession,” Kukun said in the report.
They also noted that while some flippers may have entered the market with the intent to renovate, shortages in contractors and materials may have compelled them to pursue smaller projects that did not require permits.
The National Association of Realtors reported that 43 percent of homes in Dallas County were purchased by investors, companies and corporation last year, ranking seventh nationwide. It was followd up by four other Texas counties, including Rockwall county ranked fourth at 45 percent and Tarrant County ranked third at 52.
[Dallas Morning News] — James Bell