Repair-and-flip traders took successful within the third quarter of 2024 as flipped properties accounted for a smaller share of U.S. residence gross sales in comparison with the earlier quarter. Brief-term actual property traders noticed a 28.7% return on funding (ROI), down from 31.2% in Q2 2024, in keeping with an Attom report launched this week.
The Q3 2024 U.S. Dwelling Flipping Report from Attom reviewed gross sales deed knowledge. The analytics firm outlined single-family residence and condominium flips as “any arms-length transaction that occurred within the quarter the place a earlier arms-length transaction on the identical property had occurred throughout the final 12 months.”
The report confirmed that 74,618 single-family houses and condos have been flipped from July by means of September. That represented 7.2% of all U.S. residence gross sales, down 40 foundation factors (bps) from the prior quarter. Investor income ramped down throughout the identical timeframe and now stand at roughly half of the mid-50% market peak in 2016.
“Dwelling flippers simply can’t appear to shake the doldrums. After greater than a yr when issues have been getting higher, they turned notably worse once more over the summer time,” Attom CEO Rob Barber mentioned within the report. “One quarter’s value of numbers isn’t sufficient to make any grand statements about one other downturn. The following six months ought to converse extra to that, particularly amid an ongoing tight housing market that ought to work of their favor.
“However as rates of interest stay double what they have been a couple of years in the past and inflation retains elevating renovation prices, traders proceed to have a tricky time making the form of income that might lure extra into the sport.”
Larger renovation prices, mortgage funds, taxes, insurance coverage and utility prices can negatively have an effect on fix-and-flipper revenue margins, Attom famous. A separate fix-and-flip report launched final month by Kiavi, John Burns Analysis and Consulting and on-line market Sundae had comparable conclusions. Respondents from that survey cited the identical bills as key stressors swaying their enterprise actions and choices.
On the metro stage, Attom’s report famous that the share of residence flips amongst all gross sales in Q3 2024 decreased in 62.8% of areas with sufficient knowledge to research.
The 5 metro areas with the best shares of flips within the third quarter have been Warner Robins, Georgia (22.7%); Macon, Georgia (16.8%); Atlanta (13.6%); Columbus, Georgia (12.8%); and Memphis (12.7%). In the meantime, the smallest shares have been in Seattle (3.5%); Des Moines, Iowa (3.7%); Honolulu (3.8%); Portland, Maine (3.9%); and Madison, Wisconsin (4%).
Fluctuating shares of residence flips solely inform a portion of the story. Throughout the 183 metros within the evaluation, 57.9% noticed revenue margins decline from the second to 3rd quarter.
Probably the most important declines have been in Salisbury, Maryland; South Bend, Indiana; Gainesville, Florida; Peoria, Illinois; and Youngstown, Ohio. The report additionally famous that revenue margins averaged lower than 30% for practically half of all surveyed metros. Revenue margins solely cleared 50% in one-third of those markets in Q3 2024.
Attom additionally famous that the median resale value for flipped houses was $315,250 in Q3 2024, or $70,250 above the median investor buy value of $245,000.
