Homebuyers snapping up residential properties and subsequently selling them in short order were able to more than double what they initially paid in two areas of Pennsylvania, according to a recent report.
Researchers with ATTOM Data Solutions, a company specializing in property and real estate records, stated home flippers in the metropolitan statistical areas within Pittsburgh and Scranton were able to sell homes at greater price points in the third quarter of 2019.
The information is included in ATTOM’s recently released report on home flipping trends across the U.S.
Home flippers historically have bought and quickly resold homes for a profit, typically after making a series of repairs or improvements to raise the property’s value.
Between July and September, homebuyers who flipped homes and condos in the Pittsburgh area saw overall margins of 132.6 percent, while homebuyers in the Scranton area experienced overall margins of 122.5 percent.
The high flipping yields in the Pittsburgh and Scranton areas bucked a national trend, according to ATTOM researchers, where profit margins in most areas of the country were on the downswing.
The two Pennsylvania metropolitan areas were among eight across the U.S. where home flippers experienced returns on investment of 100 percent or more during the same statistical period. Pittsburgh and Scranton also topped the list.
Other areas of the country with high yields, close behind the two Pennsylvania areas, included Flint, Mich., at 111.2 percent; Cleveland, at 109.8 percent; and Hickory-Lenoir-Morgantown, N.C., at 109.7 percent.
In a separate report from the same statistical period, ATTOM researchers also revealed the Pittsburgh area had some of the largest amounts of all-cash purchases for home flipping.
In metro areas with populations of 1 million or more, Pittsburgh ranked third for all-cash purchases, according to the report, clocking in at 77.2 percent.
The metropolitan area with the greatest preponderance of all-cash purchases was Cleveland-Elyria, Ohio, at 79.2 percent, followed by the Detroit-Warren-Dearborn MSA, at 78.9 percent.
On the whole, 56,566 single-family homes and condos were flipped across the U.S. in the third quarter of 2019, according to ATTOM’s analysis. The figure represented a 12.9 percent decrease from the previous quarter and a 6.8 percent decrease from the third quarter of 2018.
In a statement, Todd Teta, chief product officer at ATTOM Data Solutions, said the home flipping declines point to narrowing profits across many areas of the country.
“The retreat back to more normal levels of sales comes amid broader market forces that are making it harder and harder for investors to complete the kinds of deals they were getting as recently as last year,” Teta said.
In the ATTOM report, Maksim Stavinsky, co-founder and chief operating officer of Roc Capital, said homebuyers in a number of areas of the country have opted to hang on to renovated properties and rent them, rather than sell them at a loss in the current marketplace.
“We have been seeing a decline in projected and realized profits for borrowers on projects, despite the fact that borrower financing costs have been meaningfully coming down,” Stavinsky said in the report.
published here with permission of The Center Square