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High housing costs and tight property inventories are putting the brakes on home flipping.
At midyear, the number of Dallas-Fort Worth home flips was down by almost 30% from the early months of 2023, according to estimates from Attom Data Solutions. Nationwide home flips dropped by about 20% during the same period.
Home flips – properties purchased for resale – amounted to more than 9% of total D-FW transactions at midyear. North Texas home flips peaked in mid-2022 and declined as mortgage rates spiked and home prices drifted higher.
The profits from the resales of D-FW houses were down sharply in Attom Data’s latest report. At midyear, North Texas home flippers on average made $22,652 in gross profits from the sale. That compares with mid-2022 gross flip profits averaging $65,669 in the D-FW area.
The average nationwide flipping profit was $66,500.
“Fortunes for investors who flip homes for quick profits are showing more signs of turning around after a long and unusual period when they went down while the rest of the market went up,” Rob Barber, CEO for Attom Data, said in the report. “However, the latest investment returns may not be substantial enough to cover the holding costs on typical deals.
“And it’s still too early to declare the profit downturn over, as much will depend on whether the second-quarter market surge keeps going or whether it retreats again like it did last year.”
To count as a flip by an investor or remodeler, Attom Data included sales of the same property that occured within 12 months.
Home flipping activity is down in almost 90% of U.S. metro areas. The markets with the largest shares of home flips were in the Southeast, including cities in Georgia and South Carolina.
Home flipping accounted for the smallest percentage of home sales in cities in California and the Pacific Northwest.
Dallas-Fort Worth was one of the cities where home flippers earned the smallest return on their investments — only a 6.7% average gain from the sale. Nationwide the average gross profit on a home flip was more than 27%.
Home flippers in D-FW resold the property on average after 165 days. The average home resale was $361,161.
North Texas home prices have trended lower in the last few months. Median home sales prices in D-FW were down about 1% in the third quarter from a year earlier, according to the latest data from the National Association of Realtors.
Existing home sales in D-FW fell by 7% in October compared to 2022 levels.
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This article was originally published by a www.dallasnews.com . Read the Original article here. .