There were 752 home “flips” in the St Louis metro area during the third quarter of this year, representing 6.5% of the homes sold during the period, according to data just released by ATTOM Data Research. This is a decline of 7.4% from the prior quarter and a decline of 2.0% from the same quarter last year.
What is meant by “flipped” home?
ATTOM Data considers any home or condo that was sold during the third quarter of this year in an arms-length sale that had previously had an arms-length sale within the prior 12 months as well as a “flip”. Since homeowners don’t tend to buy a home only to turn around and resell it within a year, when this does occur it is typically the result of an investor buying a property, renovating it, then reselling it.
St Louis house flipping is down nearly 40% from its peak…
Flipping in St Louis hit its peak during the 3rd quarter of 2005 (nearly at the height of the real estate boom) when 1,242 homes were flipped.
Gross profit from flipping is down…
The difference between what the average flipped home was purchased for and what it was resold for (gross profit) declined 7.2% from $55,000 a year ago to $51,040 during the third quarter. Remember though, this “gross profit” number does not reflect what the investor actually made on the flip, it’s just the gross margin. There are many expenses involved with flipping a home including closing costs on the initial purchase, the renovation, and repair costs, carrying cost (interest, insurance, taxes, utilities) as well as the closing costs, sale commission, etc from the resale. After deducting the total cost of all of those items from the gross margin, then you have the actual net profit.
St Louis House Flips – 3rd Quarter 2018
