Mortgage Watch | June 11, 2018

Flips experience frenzy as market tightens

There are few more interesting real estate investments than home flipping — seeing an older or run-down piece of property find a fairy godmother to make it beautiful again and then being sold in several months’ time. According to a report in Realtor.com, home flipping activity is increasing across the country, as more investors look to capitalize on the run-up in home prices.

On par with the highest home-flipping rate since the first quarter of 2012, nearly 50,000 single-family homes and condos were flipped in the first quarter of this year, comprising 6.9 percent of all home sales, according to ATTOM Data Solutions’ Q1 2018 U.S. Home Flipping Report.

Even profits were up. with flips in the first quarter of this year selling at an average gross profit of $69,500, up from $66,287 a year ago, the highest average gross profit for flips since ATTOM began tracking such data in 2000. A flip is defined as a property that has been sold more than once in a 12-month period.

The data company’s senior VP Daren Blomquist is cited in the report saying, “The 2018 housing market is a double-edged sword for home flippers. Rapidly rising home prices boosted by low inventory of homes for sale or for rent are padding profits at the back end when flippers sell. But those same market realities are eroding flipping returns at the front end by forcing flippers to pay more to acquire homes to flip.”

Memphis, TN won the prize for the highest flip rate of the 136 metros with 15.1 percent, followed by Albany, Ore. (11.7 percent); East Stroudsburg, Pa. (11.4 percent); York, Pa. (10.4 percent); and Merced, Calif. (10.3 percent).

 

Rates Currently Trending: Neutral

Mortgage rates are trending sideways this morning. Last week the MBS market worsened by -25bps. This was enough to move rates higher last week. Mortgage rate volatility was relatively low last week.

About the Author

Tim Morissette, also known in the community as Mr. Foothill Ranch, offers over 43 years of real estate experience which has given him an established reputation and unmatched market knowledge. He is joined by his wife, Michele and son Matt, as they continue to offer personal service with an emphasis on achieving his clients’ real estate goals.  This unique combination of traits has led to his proven track record of referral and repeat business. This can be witnessed by the trust of homeowners in Foothill Ranch where he has sold twice as many homes and represented three times more buyers than the next-leading real estate agent for the last 23 years.

As residents of Foothill Ranch since 1994, Tim and Michele are actively involved in the community by fundraising for Foothill Ranch Library, Make-a-Wish Foundation, Cancer Society, Homes for Habitat, Relay for Life, South County Outreach, and the local church and schools. Tim enjoys sponsoring community-wide garage sales, as well as sponsors Paper Shredding and E-Waste Recycling events twice a year.

Tim and Michele are dedicated to their family of four sons, daughter-in-laws, and grandchildren. As a family, they enjoy many outdoor activities which include camping, spearfishing, mountain climbing and exploring the miles of hiking and equestrian trails in Foothill Ranch and the Whiting Ranch Wilderness Park. Tim and his sons are also avid snowboarders and enjoy mountain biking and lobster diving. Family is a top priority in the Morissette household. They look forward to helping more families achieve their dreams of homeownership.