Home Flipping Is Down

James Woodard
Sun, 25 Dec 2016 21:00:00 -0800
Lifestyle

Perhaps small investors are finally recognizing the risks involved in "flipping" homes. Or it may be the intense competition and lack of appropriate inventory. But whatever the reason, the flipping lure is headed downward.

Home flipping is the practice of buying a home for an under-market price and quickly reselling it for a profit.

ATTOM Data Solutions released its third quarter, 2016, U.S. Home Flipping Report, which shows a total of 45,718 single family home and condo sales were flips in the third quarter, representing 5.1 percent of all single family and condo sales during the quarter.
Updated: Mon Dec 26, 2016

Perhaps small investors are finally recognizing the risks involved in "flipping" homes. Or it may be the intense competition and lack of appropriate inventory. But whatever the reason, the flipping lure is headed downward.

Home flipping is the practice of buying a home for an under-market price and quickly reselling it for a profit.

ATTOM Data Solutions released its third quarter, 2016, U.S. Home Flipping Report, which shows a total of 45,718 single family home and condo sales were flips in the third quarter, representing 5.1 percent of all single family and condo sales during the quarter.

That's down from a 5.6 percent rate in the previous quarter, it was reported.

"The number of homes flipped decreased from a six-year high of 53,892 in the previous quarter and was down from 49,305 homes flipped in the third quarter of 2015. A total of 35,764 entities flipped properties in the third quarter, down 14 percent from a nine-year high in the previous quarter and down 7 percent from a year ago.

"For the report, a home flip is defined as a property that is sold in an arms-length sale for the second time within a 12-month period based on publicly recorded sales deed data.

"While the macro trends of low housing inventory and rising home prices are favorable for flippers, they are also a double-edged sword, attracting more competition and reducing the availability of deals — particularly in the most fundamentally sound local markets," said Daren Blomquist.

"This is chasing some investors into markets and neighborhoods that may be less fundamentally sound but also offer more value-add opportunities for flippers in the form of aging housing inventory."

Q: How is the housing market shaping up as we close out this year?

A: Generally, things are shaping up well. However, more than one in ten homeowners is underwater as the housing market nears full recovery.

Rising home values are freeing homeowners from negative equity, allowing them to re-enter the market, but 11 percent of homeowners remain upside-down.

Nationally, the negative equity rate fell to 10.9 percent in the third quarter, down from 13.4 percent a year ago.

Even as home values approach the highest levels reached during the housing bubble, 11 percent of homeowners with a mortgage are underwater, according to a report from Zillow Real Estate.

The share of homeowners who owe more on their mortgages than their homes are worth has dropped by nearly two-thirds since the housing bubble burst four years ago.

Q: Are mortgage applications continuing to rise?

A: No, not at the latest report. Mortgage applications decreased 4.0 percent from one week earlier, according to data from the Mortgage Bankers Association's Weekly Mortgage Applications Survey.

"The refinance share of mortgage activity increased to 57.2 percent of total applications from 56.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.2 percent of total applications."

Q: How do very short-term home rentals affect the housing market?

A: Nearly all housing experts surveyed last month in Zillow's quarterly survey agreed short-term home rentals do not have a meaningful and large impact on housing affordability,

"Respondents to the quarterly survey, conducted by Pulsenomics, were asked about the impact of short-term home rentals on supply and housing affordability, according to the report.

"Half of the experts surveyed said the impact is meaningful, but small. Just over 40 percent said the impact is not meaningful, and about 5 percent said short-term home rentals have a large impact on housing affordability. Just 3.8 percent responded as unsure."