Home-flipping rate in Seattle area takes a nosedive – Puget Sound Business Journal

Investors who buy fixer-uppers to flip for quick profits stayed away from the Seattle metro area, the least active home-flipping housing market in the nation.

The rate of flips — when an investor buys property to fix it up and then sells it for a profit — dropped 36.5% in the Seattle area in the second quarter, according to a new report from property data provider Attom. Year over year, house flipping has decreased by 24.2%.

There were 457 flipped homes sold in the second quarter in the Seattle area, just 3.7% of the metro’s overall market.

Nationwide, house-flipping investors paid an average home purchase price of $242,000 that later fetched them $66,500 in gross profit. Flipped homes accounted for 8% of all home sales in Q2, falling from 9.9% in the first quarter.

Seattle real estate giants Zillow Group (Nasdaq: ZG) and Redfin (Nasdaq: RDFN) both shuttered their home-flipping businesses within the last two years, citing changing market conditions.

The average U.S. home-flipping property generated 27.5% profit in the second quarter of 2023. In 2021, profitability had reached record-high levels at 61%.

In Q2 2023, investors flipped more than 84,000 homes across the U.S., which Attom defines as back-to-back transactions of the same property in a 12-month period.

“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,” Attom CEO Rob Barber said.

The barrier to entry is higher in the Seattle area, where investors typically pay $500,000 for a fixer-upper home, according to the report.

Margins are shrinking, too.

A year ago, home-flipping in Seattle yielded almost 49% return on investment. Profit margins shrunk to 17% in the first quarter of this year, then slightly rose to 21% in the second quarter.

“However, the latest investment returns may not be substantial enough to cover the holding costs on typical deals,” Barber said.