Investors are still unlocking plenty of profits on house flips, despite rising home prices that are making it more difficult to find that diamond in the rough.
In the third quarter, investors purchased a home to flip, on average, at a 25 percent discount below full “after repair” market value. They then sold the property, on average, for a 6.7 percent premium above market value, according to a new report released by ATTOM Data Solutions. The report defines a home flip as a property that is sold for the second time within a 12-month period.
In the third quarter, 5.1 percent of single-family and condo sales — or 45,718 homes – were property flips, according to the report. Homes took an average of 180 days to flip, up slightly from an average of 176 days a year ago.
The markets where investors purchased their flips at the biggest discounts, on average, in the third quarter were:
- Pittsburgh: 53.5%
- Reading, Pa.: 51.6%
- Cleveland: 51.3%
- Clarksville, Tenn.: 46.6%
- Philadelphia: 46.3%
Nationally, more than half – 53 percent – of homes flipped in the third quarter were sold by the investor for $200,000 or less; 33 percent of the homes were sold between $200,000 to $400,000, according to the report. Homes flipped for $500,000 or more accounted for less than 9 percent of all flips during the third quarter; $1 million or more accounted for less than 2 percent.